liabilities plus equity.

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

So 5 million of liabilities.

I use 100 gold pieces.

because they're both on the right hand side.

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

This is the building.

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

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)

Let's think a little bit about leverage.

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

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

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

But I have let's see 700 of liabilities.

And this is my equity that I start off with.

These are my assets, and these are my liabilities.

So you'd have 20 million left.

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

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?

So notice, I now have negative equity, right?

So 26 billion of assets minus 23 billion of liabilities means that we have 3 billion of equity of shareholders' equity.

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

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?

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

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?

And what about operating costs?

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

So I start off with 300 equity 300 gold pieces of equity.

And this is called the equity, or the owners' equity.

Our equity is equal to 300 gold pieces.

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

Capitalist country.

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

You love your heroes.

And who lost here?

So the asset value is all in equity.

Communism, capitalism...

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

Insolvency is when you actually, because of bad investments, you actually end up with less assets then do have liabilities and then there's nothing left over in the equity column.

liabilities.

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

He invested his money in stocks.

So 26 minus 23 is equal to 3.

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