So there is an NAV per share, the NAV per share over here is 200,

This guy made 21,000 this year.

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

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

And that's what?

Right?

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

That's how many we have right now.

Because we know that the book value per share is 5.

But they come back.

But in this case, you literally just take the price of the stock and you divide it by the earnings per share.

And now what's the book value of our shares? 5 billion divided by 2.5 billion, it's 2 per share.

And let's say that there are 100 million shares.

So this is trailing 12 months earnings.

We take 7.5 million from this seed venture capitalist.

So let's say in 2009 EPS this is A and this is B A is expected to make 2 per share.

And he essentially valued our old shares at 7.50 per share.

So now what does the balance sheet look like?

This is what you're valuing it at.

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.

The company issued another 2 billion shares.

Then it became 10 million for two million shares, still 5 per share.

One of them is our old friend Hobbes.

And we'll buy, how much do you need?

And let's say I've borrowed this guy's.

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

And in this video what I want to do is close the loop and see how this relates to what we talked about in the first video, in terms of price per share.

I gave the lambert family stock in my company.

I'm the sole shareholder.

Essentially, let's say they paid 1.1 billion for a million shares, so they paid 1,100 per share.

Divided by 10,000 shares is 2.10 per share.

And let's say that it's 2008 earnings.

These should be at equal size, and now the NAV per share is going to be 1,800 divided by 10, or 180.

I don't give it to my employees.

One name rang the cherries.

She sold them. And mine too!

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

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

To figure out total earnings, we would take this number and multiply by the number of shares.

I think that's 10 shares. Well that's my intention.

Well let's take a look. Let's take a look at the Great Depression.

He didn't want me.

The company shares give a high yield.

The stock has gone down over night.

You're essentially writing a check to the equity holders of this company, the shareholders of this company, they benefited from all the reward of the last five years of getting the returns on that stock price and the dividends and whatever else.