I've read that to calculate equity-to-assets using assets-to-equity the following can be done:

assets-to-equity = 40%

equity-to-assets = 1/0.4 = 2.5

Why does that work out?

1 Answer 1


Because the formulae are the inverse of each other, and the way to compute the inverse of X is 1/X. That's just the mathematical definition of "inverse".


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