Equity Multiplier formula can help you in analyzing the equity of your business with ease and simplicity. This is an example, but with this formula you can easily know how much equity is financed by equity capital and how much equity capital is financed by debt and other financial resources.
The equity multiplier, in simple words, refers to the number of equity loans taken as compared to the total amount of equity capital. This can be easily calculated using the equity multiplication formula mentioned above. This is because financial leverage is always higher/lower depending on the multipliers (if the multipliers are high/low).
This means that multiple lenders lend to a business because there is more risk of not getting back the investment. And then there are different rates for the different lenders in different countries, hence the reason why equity multipliers differ.
In a single loan you get multiple loan. There are many factors that affect the rate of interest of the loan. For example if you have a credit score high, the lenders will provide a lower rate of interest and vice versa. With the help of the multiple loan facility, it is easy to access multiple loans at very little cost.
With the multiple loan facility, your business can gain maximum exposure to the global economy without paying much higher interest costs. It also gives you the freedom to go global. In the same way, if you do not have a credit rating, you can still go for multiple loan facilities because all that matters is your ability to repay the loans.
You can have multiple loan facility in your company. You can have different companies with the same entity and in the same place, if you have the capability to repay them in a period of time.
If you have multiple loan facility, you can easily expand your organization, which is a must have in the modern day world. This means that it is possible to do so without any additional expenses to the company, if you have good credit history.
It is also possible to avail multiple loan facility from multiple sources and this is another advantage that many companies can enjoy today. Because, you can easily avail multiple loan from one source if you have good credibility and can pay back the loan installments in a reasonable time period of time.
You can also have multiple loan facility from multiple sources and this makes it possible to expand your organization. If you have multiple companies, it is easy to access multiple loans from multiple sources and this is possible when you have a good credit history.
Another benefit of multiple loan facility is that you can obtain multiple loans without any extra effort. It is so simple to acquire multiple loans. You need not submit a loan application from multiple lenders.
The multiple loan facility also gives you flexibility and if you have multiple sources of funds, you can access these sources without the added effort. as and when required.
Multiple loans with equity is available to you without much burden. With the multiple loans, it is easier to access multiple loans from multiple sources at a single rate and without any extra effort.
As there is equity multiplier involved, you can access multiple loans in a shorter span of time and with the help of multiple loans you can access multiple sources at a single rate. There are several advantages of multiple loan facility, but with the multiple loans you need to make careful decisions in order to obtain best returns.