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Wednesday, May 4, 2011

Asset to Equity Ratio Analysis

Definition: Asset to Equity Ratio is used as a measure of the company's leverage and long-term solvency. It compares total assets to total shareholder equity.

Formula:
Asset to Equity Ratio = Assets / Equity

Example 1:
TT Ltd has total assets of $20 million and its shareholder equity is $25 million, then the asset/equity ratio would be: 20 million / 25 million = 0.8

Example 2:
MOU Ltd has

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