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The equity multiplier measures financial leverage — how much of a company's assets are financed by equity versus debt. Equity multiplier = Total assets / Total shareholders' equity. A higher value means more debt financing.

Guía paso a paso

1. 1Get total assets from the balance sheet
2. 2Get total shareholders' equity from the balance sheet
3. 3Equity multiplier = Total assets / Total equity
4. 4It forms one leg of the DuPont ROE decomposition: ROE = Net margin × Asset turnover × Equity multiplier

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