Equity Multiple (EM)
Investor Term:
EM
Definition:
Equity multiple (EM) is a ratio that measures the amount of return an investor receives on their equity investment in a property. It is calculated by dividing the total cash flow generated by the property by the amount of equity invested.
Formula:
EM = Total Cash Flow / Equity Invested
Example:
For example, if a property generates $100,000 in annual cash flow and the investor has invested $50,000 in equity, then their EM would be 2.