Higher financial leverage, such as a higher equity multiple, drives ROE upward as long as all other factors remain equal. Consider Apple's (AAPL) balance sheet at the end of the 2021 fiscal year.

Cost of Equity = 2% + 1.5 × (8% – 2%) = 2% + 9% = 11% In this example, the cost of equity is 11%, meaning investors expect an 11% return on their investment to compensate for the risk ...

The realization multiple is a private equity measurement that shows how much has been paid out to investors. The realization multiple measures the return that is realized from the investment.