That assets, A for assets, is equal to

It should start to make a little bit of intuitive sense

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

So the only liability is this 5,000.

So this is just another visual representation that

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

liabilities plus equity is equal to assets.

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

liabilities.

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

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

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

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

And so liabilities plus equity is equal to assets.

I'll draw it a little bit bigger.

This is the angel investor, and this is all of us down here, and all of this is equity.

My liabilities would be 145,000.

that assets are equal to liability plus equity.

What's my equity?

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

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

And we have 23 billion in liabilities.

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

These are my assets.

But Lehman Brothers' assets might be greater than its

Remember liabilities plus equities are equal to assets.

Because assets are equal to liabilites, (these are the liabilities right here) plus equity.

And this is another important thing to think about.

Well all of our earnings, since our debt stayed the same.

These are my assets, and these are my liabilities.

Because we spent 100,000 of our cash.

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)

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

So notice, I now have negative equity, right?

Now what's different about them is what happens on the other side of the balance sheet and this is what I meant by them having different capital structures so let me draw the liability's side for both of these characters so let's do liabilities

So once again they're valuing all of the assets at 225,000.

And we have 5 billion in assets, 4 billion of

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

And so you can see very simply that assets I'll write this down, you're getting a little bit of a introduction to accounting right here but assets are going to always be equal to liabilities plus equity.

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?

When we talk about valuation we're talking about the value of the assets, especially because we're not dealing with any debt right now.

So liabilities. Liabilities.

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

Our equity is equal to 300 gold pieces.

Well not the whole side, we're going to have equity down here.