Assets To Equity Ratio


Assets to equity ratio equals total assets divided by total shareholders' equity.

The assets to equity ratio is calculated by dividing a company’s total assets by total shareholders’ equity, both found on the balance sheet.


The assets to equity ratio is considered a solvency ratio and financial leverage ratio that gives an idea about whether a company finances its assets more by issuing debt or equity.

A ratio above 2 means that a company finances its assets more with debt than equity, which could make it a more risky investment. This can be explained with the accounting equation:

Total shareholders’ equity = total assets – total liabilities

Less riskyMedium riskMore risky
Shareholders’ Equity$75$50$20
Total Assets$100$100$100
Total Liabilities$25$50$80
Assets to Equity Ratio1.3315

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