What is the equity ratio? Formula, ranges and example
What is the equity ratio?
The equity ratio measures owners' equity as a share of total assets. Hachiquant uses equity attributable to the parent’s owners, excluding non-controlling interests, and divides it by period-end total assets.
Formula
Equity ratio (%) = owners' equity ÷ total assets × 100
- Under IFRS, use equity attributable to owners of the parent.
- Under J-GAAP, owners’ equity = net assets − subscription rights to shares − share acquisition rights − non-controlling interests. Shareholders’ equity alone excludes valuation and translation adjustments and is not a substitute.
- This uses period-end figures, not averages. Unavailable inputs or non-positive total assets give an unavailable result; negative owners’ equity yields a negative ratio.
Ranges and interpretation
| Range | Interpretation |
|---|---|
| <0% | Negative owners’ equity. Investigate losses and financing urgently rather than suppressing the negative value. |
| 0%–<30% | Less equity cushion than the general 30–40% reference; industry and business model matter. |
| 30%–40% | An often-cited broad reference, not a universal healthy range or an observed listed-company median. |
| >40% | More owners’ equity relative to assets, not proof of liquidity, efficient capital use or good returns. |
Worked example from a filing
Year ended March 31, 2026 (–)
IFRS · Consolidated · JPY
| Input | JPY million |
|---|---|
| Equity attributable to owners of parent | 39,918,854 |
| Total assets | 105,522,331 |
39,918,854 ÷ 105,522,331 × 100 = 37.8%
Toyota’s 37.8% means approximately ¥37.8 of owners’ equity per ¥100 of assets. The remaining share is not all debt: non-controlling interests can also be present.
Source elements
- Equity attributable to owners of parent
- jpigp_cor:EquityAttributableToOwnersOfParentIFRS
- CurrentYearInstant
- Total assets
- jpigp_cor:AssetsIFRS
- CurrentYearInstant
Compare industry peers: transportation-equipment equity ratios
What to watch
- Cash availability differs from equity.
- Compare peers and trends on the same accounting standard, consolidation scope and period basis.
- Banks’ regulatory capital-adequacy ratios use different denominators and cannot be compared with these percentages.
- A high ratio is not a buy signal.