The ratio of change of amplitude of carrier wave to the amplitude of normal carrier wave is called the modulation factor m.
The value of modulation factor depends upon the amplitudes of carrier and signal. The modulation factor describes the depth of modulation i.e., the extent to which the amplitude of the carrier wave is changed by the signal.
Modulation factor determines the strength and quality of the transmitted signal. In an AM wave, the signal is contained in the variation of the carrier amplitude. When the carrier is modulated to a small degree (i.e., small m) the amount of the carrier amplitude variation is small. Consequently, the audio signal being transmitted will not be very strong. The greater the degree of modulation (i.e., m) the stronger and clearer will be the audio signal. If the carrier is over-modulated (i.e., m > 1), distortion will occur during reception.
