One of the viewers pointed out not incorrectly that one definition of return on asset so this whole video's going to be on return on asset that one definition of return on asset, and if you look it up on some of the finance sites or even some finance textbooks, they'll tell you it's net income over total assets.

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

And so, using patient capital money that they could raise early on, that actually got below market returns and was willing to go the long haul and be combined with management assistance, strategic assistance they've now created a company where they purchase from 7,500 farmers.

So 5 million of liabilities.

So let me switch colors just to ease the monotony.

We didn't say we're going to send a man 20 percent to the moon.

Bring them onboard.

Got it.

So the amount that this number grows by, the amount that our equity grows by, is earnings.

You'll hear people talking in terms of 10 1 or 2 1, or something to one, but 10 3 is a fair leverage ratio.

What I want to do here is focus on valuation and see whether the price to earnings ratio holds up to scrutiny in this situation, where you have an identical asset but very different capital structures.

And why don't you like them as much?

Uh, when I started farming,

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

And then renovating smaller chillers instead of adding bigger ones saved 17 million dollars of capital cost, which helped pay for the other improvements and reduce the payback to just three years.

So did we recover the cylinder?

So you got the corpse?

It's the same plot.

It's just a faster way of saying

700 rads per shot. (Laughter)

And if you are an investor, you're probably going to want to do the last of the three.

Maybe I feel that the computer models that I have are really good at predicting things like default rates, and recovery rates, and what a loan is worth.

That assets, A for assets, is equal to

But we'll do a whole playlist on that.

Take it out of his payroll.

Can any data be recovered?

looks neutral.

Maybe it goes to 2 in 2010.

The return on the investment will be high.

Time the probability of two sided coin.

Maximum iterations

The case has returned.

Divided by the probability of in general, the probability of getting 5 out of 5 heads.

So a lot of people immediately will figure out the Price to

So in 2013 you'll be making 16.

Today, there are 2.3 million.

Like its agriculture,

Typically our retrofit designs save about 30 to 60 percent of the energy and pay back in a few years, while the new facility designs save 40 to 90 odd percent with generally lower capital cost.

In the next video, I'll show you that the reason why this is kind of breaking down is because a price to earnings ratio does break down to a certain degree when you start comparing things with different capital structures.

So in the beginning the monkey could not perform this task at all.

That's what probability of getting 5 out of 5 heads given that I picked a normal coin out.

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

I want you to collect magazines from everybody.

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