Equity Ratio Calculator


Why use the equity ratio calculator?

The equity ratio calculator is a tool that helps determine a company's financial health by measuring the proportion of equity to total assets. It is calculated by dividing the company's total shareholder equity by its total assets.


How do you calculate an equity ratio?

The equity ratio is an essential metric for investors and analysts as it indicates the level of a company's leverage, or how much debt it has relative to its assets. A company with a high equity ratio has fewer obligations and is thought to be financially stable, while a low equity ratio may be a sign of financial risk.
To use the equity ratio calculator, input the following information:

 The following formula to find the Equity Ratio.

Equity Ratio = Total Owner's Equity / Stockholders' Equity

Total shareholder equity
Total assets
The calculator will then provide the equity ratio as a percentage.

Example:


Total shareholder equity: $500,000
Total assets: $1,000,000
Equity ratio: 500,000/1,000,000 = 0.5 or 50%


This means that 50% of the company's assets are paid for with money from the shareholders, and the other 50% are paid for with debt.
It's important to note that the equity ratio can vary depending on the industry and company size, so comparing a company's equity ratio to its peers in the same sector is critical. To get a full picture of a company's financial health, it's also important to look at the equity ratio alongside other financial metrics.

 


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