Equity to Fixed Assets = Equity / Total Fixed Assets
- It shows how a company’s fixed investments are financed by Equity.
- When the value of the index is >1, then a part of the company’s Investments comes from its shareholders (Equity).
- When the value of the index is <1, then borrowed funds have been used to finance fixed assets.
Business actions to improve the Index
- Increase Equity through
- Reducing Dividend Yield
- Reducing Provisions
- Increasing Share Capital
- Reducing Fixed Assets through
- Liquidation of Fixed Assets
