according to 11th hour, leverage is better under the equity method because liabilities are lower, while equity is the same.
wait, isnt equity lower under the equity method?
equity is the same because NI is the same.
Leverage as in assets/equity? yes equity is the same but assets are less with the equity method, hence better ratio
Equity would be the same if you don’t consider minority interest accrued with the acquisition method.
I think they`re wrong. Equity is lower on the equity method when compared with the acquisition method. Equity will be the same when comparing equity method and the PROPORTIONATE consolidation method.
Net income will always be the same (equity method, acquisition method, and proportionate consolidation method).
This! But generally minority interest is considered part of equity, when asked to compute and compare ratios.
bingo, thats where i was confused. thanks