If a firm has an equity multiplier of 3, this means that the firm has $3 in equity for every $1 in long-term debt.

Name: If a firm has an equity multiplier of 3, this means that the firm has $3 in equity for every $1 in long-term debt.
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An equity multiplier of 3 means that for every $1 of equity, the firm has $3 of assets. It indicates the firm's leverage, not the ratio of equity to long-term debt.

If a Firm Has an Equity Multiplier of 3, This