Equity Multiplier

Calculate the equity multiplier, a solvency ratio that measures the degree to which a company uses borrowed money (debt) to finance its operations and growth.

The equity multiplier helps assess the financial leverage of a company by indicating how much of its assets are financed by equity versus debt. A higher equity multiplier suggests that the company relies more on debt financing, which can amplify returns but also increases financial risk. Conversely, a lower equity multiplier indicates a larger portion of assets is financed by equity, potentially lowering financial risk.

The formula is as follows:

The equity multiplier is the leverage component of the DuPont analysis: return on equity equals return on assets times the equity multiplier. Banks run multipliers of around 10 or more, which is why their small returns on assets translate into returns on equity in the teens. For other companies a rising multiplier can come from new debt but also from buybacks that shrink equity.

Also known as: financial leverage multiplier.

Equity Multiplier in Python or via the MCP

Install the Finance Toolkit with:

pip install financetoolkit -U

Then call get_equity_multiplier as shown below.

from financetoolkit import Toolkit

toolkit = Toolkit(
    ["HSBA.L", "BNP.PA", "SAN.MC"],
    api_key="FINANCIAL_MODELING_PREP_KEY",
    start_date="2021-01-01",
    end_date="2025-12-31",
)

toolkit.ratios.get_equity_multiplier()

Or, after setting up the Finance Toolkit MCP, ask:

Which returns:

Parameters

get_equity_multiplier accepts the following parameters.

Related Solvency Ratios