A company can improve its equity multiplier by increasing its debt ratio, holding everything else constant in the balance sheet.

Name: A company can improve its equity multiplier by increasing its debt ratio, holding everything else constant in the balance sheet.
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Question

Quizplus · Accepted Answer

The equity multiplier is calculated by dividing the total assets of a company by its equity. Therefore, increasing the debt in the balance sheet without changing the total assets will result in a higher equity multiplier.

A Company Can Improve Its Equity Multiplier by Increasing Its