What does equity multiplier mean on the CPA exam?
Equity multiplier. Total assets divided by equity. How many dollars of assets each dollar of equity supports, and one of the three drivers in the DuPont decomposition.
Which CPA exam sections use equity multiplier?
Equity multiplier appears in 6 CPA exam sections: AUD, BAR, FAR, ISC, REG, TCP.
Related terms
- total asset turnover: Sales divided by average total assets.
- total assets: Everything the entity controls that is expected to produce future benefit, added up.
- total liabilities: Everything the entity owes, added up.
- net position: A government's assets plus deferred outflows, less liabilities and deferred inflows.
- net profit margin: Net income divided by sales.
- average total assets: The average of opening and closing total assets, used wherever a period flow like sales is compared to a balance.