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One of the ratios in the DuPont Framework is the Equity Multiplier (Total Assets / Total Equity) which is claimed to be a measure of
- One of the ratios in the DuPont Framework is the Equity Multiplier (Total Assets / Total Equity) which is claimed to be a measure of financial leverage, i.e., the use of debt. How is it then that the Equity Multiplier contains no explicit measure of debt? Make up some numbers for two direct total debt ratios--Debt / Assets and Debt / Equity--and show that the Equity Multiplier will move in the same direction as these total debt ratios.
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