Or they just have a super flush bank account.

And it's worth 100 gold.

These are liabilities.

So let's see, I have my assets right here.

liabilities plus equity.

Remember liabilities plus equities are equal to assets.

They'll often say just like a big bucket of, they'll call them level three assets.

All of the assets needed to start the firm, the pizzeria.

Remember, every time it'd issue a loan, like for right here, it issued a 100 gold piece equivalent loan to D and instead of giving D 100 gold pieces from, say, right here, it just created a checking account for D, which later D paid to A and that's why it's labeled A right here. Let me relabel another thing because the gold is a different color just so you see the gold.

But let's just kind of think about a generic balance sheet for a bank.

I'll do that in yellow.

So I'll write that up here.

liabilities plus equity.

Mark to model.

They're assets for those people.

I use 100 gold pieces.

Let's calculate our total liabilities.

loan to Bank A.

So this is the operating profit. This is the money that just comes out of the asset itself.

And what I wrote here is, it has 4 billion of liabilities.

It's the same plot.

But this is the market value of the assets.

Maybe we have some patents now.

So that's the situation we're dealing with.

I have in my house.

So its assets.

Let me fill this in.

It doesn't sound like we borrowed money or anything.

That assets, A for assets, is equal to

That's its asset it has.

That it'll just disappear.

And then the equity is, essentially we would look at this formula.

You don't even need the loan.

His assets were auctioned off

If you have a 10 year loan, you'd put 10 here.

And then whatever assets I get I would have to sell it.

So obviously there's no two companies that are identical in this way, but let's say that they are.

I still owe 750,000.

Malibu Equity and Investments.

Because in the last video I talked a little bit about return on asset, where we just took the operating profit, and we divide that by the assets.

The rights on those payments that's the asset.

let me give you that piece of terminology, it just means net asset value.

But that's not the issue here.

And equity is what you have leftover.

Phuong, I'm not a rich man but I do have assets.