What is the equity multiplier for 2010?
A)1.21
B)1.36
C)1.44
D)1.82
E)1.91

Name: What is the equity multiplier for 2010? A)1.21 B)1.36 C)1.44 D)1.82 E)1.91
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Question

Quizplus · Accepted Answer

The equity multiplier is calculated as Total Assets/Total Equity. For 2010, Total Assets are $800,000 and Total Equity is $200,000. Therefore, the equity multiplier is 800,000/200,000 = 4. This is the same as 1 + Debt/Equity Ratio. Since the Debt/Equity Ratio for 2010 is 1.36, the equity multiplier is 1 + 1.36 = 2.36. Therefore, the answer is B.

What Is the Equity Multiplier for 2010