calculate_equity_multiplier
Calculate the equity multiplier: total assets divided by shareholders’ equity — a leverage measure of how many units of assets each unit of equity supports. Formula: Equity Multiplier = Total Assets / Shareholders’ Equity. WHEN TO USE: Use in DuPont analysis to quantify the financial-leverage component of return on equity, or on its own to gauge how many units of assets each unit of equity supports. WHEN NOT TO USE: Do NOT use alone — a high multiplier can mean efficient leverage or distress depending on profitability (interpret it alongside margin and turnover analysis). BEHAVIOUR: pure deterministic calculation — no side effects, no network or storage access; idempotent and non-destructive; identical inputs always produce identical outputs. Division by zero or non-finite inputs returns an explicit error instead of a number. RETURNS: JSON object { equity_multiplier: number (e.g. 3.6 = 3.6x), inputs }. PARAMETERS: total_assets (required): Total assets, e.g. 720000. Must be > 0. shareholders_equity (required): Total shareholders’ equity, e.g. 200000. May be negative in distress.
Input Schema
| Name | Required | Description | Default |
|---|---|---|---|
| total_assets | Yes | Total assets, e.g. 720000. Must be > 0. | |
| shareholders_equity | Yes | Total shareholders’ equity, e.g. 200000. May be negative in distress. |