All the equation does is to tell you what the relative thickness of the yarn will be when it's doubled. No more, no less.
E.g., let's say the gauge listed on the ball band is 30 rows over 4 inches, or 7.5 stitches per inch. When double stranded, the gauge will be approximately 7.5 X .7 or 5.25 stitches per inch. You'll want to treat 5.25 as the "new" ball band gauge, and adjust your needle size and gauge accordingly, based on your experience. So, if you prefer to knit loosely, maybe when a ball band says 5.25 stitches per inch, you like to use size 10 needles, and typically get 5 stitches per inch. That's what you can expect from the yarn when double-stranded. It would probably be different for me, but the math part is the same, regardless. Of course, I wouldn't count on the results for more than very general planning purposes.
Did that answer your question? It really is all moot when it comes down to it, because you're probably going to do a gauge swatch anyway.