Assets to Shareholder Equity

View Financial Glossary Index

Definition

Assets to Shareholder Equity is a measurement of financial leverage. It shows the ratio between the total assets of the company to the amount on which equity holders have a claim.

A ratio above 2 means that the company funds more assets by issuing debt than by equity, which could be a more risky investment. A low ratio could be seen as more conservative.

The Assets to Shareholder Equity moves in conjunction with the debt to equity ratio.

Formula

Assets to Shareholder Equity = Total Assets / Stockholder Equity

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