Equity ratio
The share of equity in assets: how far the company belongs to itself rather than to its creditors.
Formula
\frac{\text{Equity}}{\text{Total assets}}Stored as a fraction rather than a percentage; the screen multiplies before showing it.
How to read the number
The other side of leverage: the higher the equity ratio, the less the business depends on banks being willing to roll their loans over.
When the metric lies
Banks compute this differently and under separate capital adequacy rules — comparing a bank with a manufacturer on the equity ratio is not valid.
Where it is used
The metric is calculated across every security in the catalogue and appears on the instrument card, in the multiples table and in the screener.
Also known as: equity ratio, equity to assets