Equity as Percentage of Capital Employed FAQs
The equity ratio, also known as capital ratio or "financial leverage" ratio, tells investors how much of the company's assets are funded by owners. Equity includes common shareholder equity and preferred stock, which combined represent ownership in a corporation.
Equity includes common shareholder equity and preferred stock, which combined represent ownership in a corporation. It is found by using this formula: Equity = Common Shareholder Equity + Preferred Stock
Total assets are all assets on a company's balance sheet. They are found by using this formula: Total Assets = Current Assets + Long-term Assets
The formula is: Equity Ratio = Equity / Assets
Current assets are found by using this formula: Current Assets = Cash and Short-Term Investments + Accounts Receivable + Inventory + Other Current Assets
True Tamplin is a published author, public speaker, CEO of UpDigital, and founder of Finance Strategists.
True is a Certified Educator in Personal Finance (CEPF®), author of The Handy Financial Ratios Guide, a member of the Society for Advancing Business Editing and Writing, contributes to his financial education site, Finance Strategists, and has spoken to various financial communities such as the CFA Institute, as well as university students like his Alma mater, Biola University, where he received a bachelor of science in business and data analytics.
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