In a world without leverage so if I didn't have all this

liabilities plus equity.

So 5 million of liabilities.

So, remember, assets are equal to liabilites plus shareholder's equity, so if all of a sudden the market value of the equity, the market capitalization, for Ben's shoe company is 215,000... (That is the equity part right over here)

because they're both on the right hand side.

I use 100 gold pieces.

But it's really a measure of the same thing.

This is the building.

My new balance you will look like this 150 and 150.

I owe these people that money is 700 and my equity is 300.

Now what's our mantra of this day and age I wonder?

Let's think a little bit about leverage.

But I have let's see 700 of liabilities.

And the equity holders get wiped out, the old equity holders.

Right?

And then what's left over, which is essentially so this is 2 million of equity, and then you'd have 2 million of equity here this 2 million of new equity, right?

But they come back.

And just to kind of tie it a little bit with what we did in the first video, if we have a million shares, the book value of the equity is 5 million, so if we say the book value per share is just going to be this number divided by the million shares I have.

And that's how we got equity of 3 billion.

So right now in this world, my assets are what?

So in our example right now, what is our equity?

And this is my equity that I start off with.

I'm the sole shareholder.

When they assign a 120,000 market cap there...

It's the split of just the equity part right over here

In the next step, we built the network around these companies, so we took all the TNCs' shareholders, and the shareholders' shareholders, etc., all the way upstream, and we did the same downstream, and ended up with a network containing 600,000 nodes and one million links.

Well, if my assets are 500 and my liabilities are 700, then what is my equity?

This guy made 21,000 this year.

These are my assets, and these are my liabilities.

We take 7.5 million from this seed venture capitalist.

They have investors, they have shareholders. Shit like that.

How much is each share worth, if we believe all of these numbers?

So notice, I now have negative equity, right?

I don't give it to my employees.

He invested his money in stocks.

And they can say like, this VC can say oh, you know what?

So what they do is they just take your earnings number and you divide by the number of shares.

The board of directors of a firm is essentially elected by the shareholders.

Because if someone tells you debt to equity, you can figure out the assets to equity, but in this case, the debt to equity ratio before I took any losses it was what?

So essentially, whoever lent Loan C, all of these shares are now their shares.

So you'd have 20 million left.

Let me do it in a different color just so the equity stands out from the liabilities.

And in this case, if it's a publicly traded company, what is its shareholders' equity?

This is what you're valuing it at.

So that means if all of these numbers are correct, then the stock of that company is worth 6.00 per share.