BMRN - Equity Versus Debt: A Showdown
The equity multiplier is a simple formula: assets divided by equity. It’s frequently used as a measure of financial leverage, since assets minus equity equals liabilities. Everyone seems to agree that a lower equity multiplier is better. Investopedia:
It is better to have a low equity multiplier, because a company uses less debt to finance its assets.
The higher a company’s equity multiplier, the higher its debt ratio (liabilities to assets), since the debt ratio is one minus the inverse of the equity multiplier. So it follows that a low debt ratio is also