In return on equity, the numerator is the net income that we got, so it's 350,000.

That's also going to help us figure out the domain.

So everything we have so the assets are equal to our equity and I'll do that in a brown color so there's no liabilities and we just have equity.

The company is 51 owned by American capital.

Now, I think this future will be quite surprising to many people.

This guy, he does have interest.

And what is required is a combination of physical capital, institutional capital, human capital and security, of course, is critical, but so is information.

And then on the equity side, because we have no liability, so in this case assets will be equal to equity.

That assets, A for assets, is equal to

But we'll do a whole playlist on that.

Now we can do another notion, and that's return on equity.

So this is just another visual representation that

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

We had better utilize our natural resources.

They just have it around.

He's got the drop on her.

And it's legitimate monopoly of means of violence, administrative control, management of public finances, investment in human capital, provision of citizenship rights, provision of infrastructure, management of the tangible and intangible assets of the state through regulation, creation of the market, international agreements, including public borrowing, and then, most importantly, rule of law.

Because the owners of this country don't want that.

You love your heroes.

So the equity holders are actually the owners of the company.

If you talk about all the things you own minus all the things you owe to other people, equity is what's left over.

It should start to make a little bit of intuitive sense

That's basically how this thing operates.

And so we took this number as the numerator and we divided by the number of assets.

liabilities plus equity is equal to assets.

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

It describes it right over here the change in equity, sometime the change in retained earnings, or just change in equity, that is going to be the 200 in net income that the company got over that time period.

So these people, their financial planner, and their siblings, and their friends at work say, oh, your balance sheet is so inefficient, why don't you take some of that equity and invest it or put it to work.

Pole caught no bycatch.

liabilities plus equity.

And we have 5 billion in assets, 4 billion of

liabilities.

I think you can get change.

An analogue would be the growth of bacteria in a petri dish.

We need flat land, we need 300 days of sunlight, and we need to be near a gas pipe.

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

less capital intensive that there's less money that's required

Obviously , a machine you can't do all of those things to it, but you can at least touch it and possibly smell and taste it.

let's say this is a publicly traded company.

That's the one advantage that older people have.

I take the paper... and I make it work.

My liabilities would be 145,000.

But let's say its assets are worth 1 million.

In the last video I talk about how both Ben's Shoes and Jason' shoes are fundamentally the same business but they have different capital structures.

I guess you can't quantify charisma and good looks.