I keep getting confused about leverage ratios. Sometimes I’m thinking about D/E or D/A or I’m thinking about A/E. If CFA question asks about financial leverage, should I just be thinking D/E or D/A whereas A/E is an equity multiplier (not sure what this means)? This feels like a really boneheaded question so please bear with me but what are the key differences between these 3 ratios?
Financial leverage is Assets/Equity. This is the formula to use in 3-step DU POINT ANALYSIS to find ROE.