That assets, A for assets, is equal to

But we'll do a whole playlist on that.

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

It should start to make a little bit of intuitive sense

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

liabilities plus equity.

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

So this is just another visual representation that

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

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

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

Capitalist country.

I'll do that in yellow.

Let's figure it out. It's equity.

One, what shares are share of

You love your heroes.

liabilities plus equity is equal to assets.

I use 100 gold pieces.

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

liabilities.

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

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

Good health is his capital.

So the only liability is this 5,000.

It's good for you.

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.

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

So he owns it outright so all of the 100,000 of asset value is actually his equity.

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

You can pass it around.

So let me do that in a vibrant color.

That's 11,000.

Let me do equity in a different color.

It's all his equity.

So now it's getting interesting.

Well, I have 250,000 left over.

My liabilities would be 145,000.

Remember liabilities plus equities are equal to assets.

How much equity do they have?

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

that assets are equal to liability plus equity.

What's my equity?

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