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Saturday, August 6, 2011

How to Calculate Equity Ratio

Definition: Equity Ratio measures the relative proportion of equity used to finance the company's assets.

Equity Ratio = Owners Equity / Total Assets

Learn how to calculate the ratio with the following examples:

Example 1:
ABC Company has $700,000 in total assets and $200,000 in debt and loans, then:
The shareholders' equity = Total Assets - Total Liabilities = 700,000 - 200,000 =


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