That just comes out of the definition of what equity is.

That assets, A for assets, is equal to

I'll do that in yellow.

It should start to make a little bit of intuitive sense

liabilities plus equity.

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

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

So this is just another visual representation that

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

Remember liabilities plus equities are equal to assets.

I use 100 gold pieces.

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

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

Right?

liabilities.

These are my assets, and these are my liabilities.

liabilities plus equity is equal to assets.

My liabilities would be 145,000.

I think I can safely say that I'm the only trillionaire in this room.

These are their assets, just to get all the labelling right.

that assets are equal to liability plus equity.

What's my equity?

So I'm going to give you a little equation, actually, just to take a little bit of a tangent.

And so liabilities plus equity is equal to assets.

I'll draw it a little bit bigger.

If you take an MBA, they'll write it down, and it looks

What we have is one thing and what we are is quite another.

like an equation, but it's assets is equal to liabilities plus equity.

Communism, capitalism...

So its assets.

So anyway, what happens in Chapter 11?

Remember the shares are split of the owner's equities not the split of the assets

And we have 23 billion in liabilities.

Or the other way to view it is, assets minus liabilities is equal to equity, right?

like any corporation, and they have to, the liabilities, plus the equity has to match up to the assets.

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

Malibu Equity and Investments.

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

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.

Well, that means the ratio of the assets to the equity is 2 1.

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)

Each share in this case once again, if you believe that the assets are worth 1 million are going to be 1 million.

Capital intensive industries are not necessarily knowledge intensive industries.

I don't want to draw this box.

And rich, eh?