And I'll do a bunch of videos on margins in the future.

And the best thing that we as humans have been to be able to come up with is a market.

It'll be worth twice as much to us on the black market.

Ben has actually done a good job of saying the market value of his inventory, the market value of his equipment.

So the first one I'd like to parce is the idea of market value.

Well, what the market is saying in this situation, and this is actually what tends to happen where the market value or in general the market value of a company tends to be higher than the book value, is that the company is saying that this company has some type of intangibles, things that you really can't put a finger on, or touch or feel or hold.

And we don't know why the market is saying that.

I want to know the size of the market.

And there's only 10 shares. So they're valuing the assets at 500,000. And this is of course the market value of the assets.

But the market value or assets is essentially, what is the market saying the assets are worth?

So this is the more formal definition of GDP

So what you do is you multiply these numbers to figure out, what is the market value or the market capitalization of the company?

So the market cap, or what the market perceives the value of this equity is, the market capitalization, is these two numbers.

It's just like you would for a Dollar, Euro, or Yen.

We're willing to say that the market value of your equity is 210,000.

Peter Brabeck

I'm going to make money that I otherwise wouldn't have made.

That's great.

And you take out the liabilities, this is what the assets are worth according to the accountants.

They're arguing that the few people who transacted did it out of desperation.

And there's a whole methodology to how one would account for that.

Or 0.5 billion.

So that's fine.

Devaluing Life

Rome is a city worth visiting.

Or another way of viewing it, is that this is the market's guess, or you could call it the market value of the equity.

Because when the company needs to raise money, that is used as kind of the fair market value of a company's shares.

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

But we'll talk a lot more about that when we deal with real examples.

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)

ECX, moreover, can become a trading platform for a pan African market in agricultural commodities.

We know there's a million shares.

And this calculation, this multiplication of market price per share times the number of shares this is called the market cap

That's essentially the market's sense of what this number really is.

So they're saying essentially that the market cap, and that's equivalent to the market value of the equity, or what the market thinks the equity is worth, that's 1 times 500 million shares.

And this is very relevant to what's going on in the world today.

So in summary, the questions you want to ask are how big can this be, how much of it can we get, what's the growth rate of the market, is the market itself declining or is it in flux or is it taking off? and most importantly here is talk to customers and the sales channel, and next important is you can get some pretty good market size estimates by competitive approximation if it's an existing or resegmented market, or even if we're going to clone a market outside the US.

So I'll pay 2 per share, which is a little bit of premium over the market value at the time, which was 1.

So we have to be careful.

And we feel that over the next five years, if Ethiopia can capture even 40 percent, just 40 percent, of the domestic market, and add just 25 percent value to that market, the value of the market doubles.

He's worth 250 in Carson.

We saw in the last video that the contribution to GDP will just be this final product it will just be the fifty dollars worth of jeans and we know its value based on its market value, what people are willing to pay for it.

I think that's what I wanted a write here, market value of equity.

So let's call that market equity.

That's still way more expensive than most companies.