This is 120,000 in equity, market value of equity, he has another 105,000 in liabilites.

So liabilities. Liabilities.

Let's say assets and I'll talk about margin requirements

Minus 1.075 that was the max that I could borrow

I had 100 of cash, no accounts receiveables,

My assets are 250,000.

And this is an annual income statement.

And then we have the debt, the debt of the company, or the

Let's think about its liabilities.

I owe the bank 750,000.

Now you could also have a yield curve for other types of debt.

I owe nothing to anyone.

And I'll talk more about that later.

This was equity.

Well, nothing.

And then we have interest expense.

So a security in the equity world is a stock.

liabilities as well.

It had 5 million of debt.

What are my liabilities?

That assets, A for assets, is equal to

Most times the liabilities are pretty easy to get a handle on.

So this is just another visual representation that

And just so you don't get confused, there's always a

I had some debt.

Let's just say it's all of it.

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

And let's say that's all of their liabilities.

So once again, if this is a balance sheet, this is the assets, here are your liabilities.

Everything on the right hand side is equity, so this is all equity.

I still owe 750,000 to bank.

So my liabilities I owe the bank 750,000.

Because essentially, or you can view it this way, if you subtract liabilities from both sides, assets minus

It could be that one of these liabilities is worth more.

But let's see how that would have affected the income statesments and the balance sheet.

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

An even bigger picture, if I now look at my balance sheet, what are my liabilities now?

This is the equity...

So we could say, well, a new figure comes out ... let's see African debt.

Well, its assets are let's see one plus 21, 25, 26 billion in assets and its liabilities are 23 billion.

I think I had called it Loan C.

What I'm squaring off in blue, that's the

So where does this lead?

Well I have cash, I have 250,000 worth of cash.

It doesn't matter.