And there's only 10 shares. So they're valuing the assets at 500,000. And this is of course the market value of the assets.

We're willing to say that the market value of your equity is 210,000.

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)

But the market value or assets is essentially, what is the market saying the assets are worth?

And there's a whole methodology to how one would account for that.

So the first one I'd like to parce is the idea of market value.

And you take out the liabilities, this is what the assets are worth according to the accountants.

And I'll do a bunch of videos on margins in the future.

And it's essentially, what is the market saying the equity is worth?

And we'll introduce debt later, because that's another variable that a lot of people don't think about when they

And the best thing that we as humans have been to be able to come up with is a market.

They're the share of owner's equity and not of the asset also gives you a good sense of what market cap is

It'll be worth twice as much to us on the black market.

So what is the value per share?

So let's call that market equity.

Ben has actually done a good job of saying the market value of his inventory, the market value of his equipment.

So they're saying essentially that the market cap, and that's equivalent to the market value of the equity, or what the market thinks the equity is worth, that's 1 times 500 million shares.

levels of debt, will probably lose some money.

Now, it's worth 250,000.

let me give you that piece of terminology, it just means net asset value.

I think that's what I wanted a write here, market value of equity.

Or another way of viewing it, is that this is the market's guess, or you could call it the market value of the equity.

We know there's a million shares.

Well, what the market is saying in this situation, and this is actually what tends to happen where the market value or in general the market value of a company tends to be higher than the book value, is that the company is saying that this company has some type of intangibles, things that you really can't put a finger on, or touch or feel or hold.

And we don't know why the market is saying that.

So here investors are valuing this company at 1 times a million shares.

And then at the end of 2008, beginning of 2009, our balance sheet under the assets, the machine, if they gave us that

I want to know the size of the market.

Well I would have 50,000 left over.

So over here, let's say you did it right at the beginning of the year, the asset's worth 500,000.

So this is the more formal definition of GDP

So what you do is you multiply these numbers to figure out, what is the market value or the market capitalization of the company?

So the market cap, or what the market perceives the value of this equity is, the market capitalization, is these two numbers.

And the way you get that is, they're saying 3 a share and there are half a billion shares.

So the balance sheet is really trying to capture what your asset is worth at that point in time.

So I'll write that up here.

And so after that offering, well, our pre money valuation was 30 million and our post money is now 40 million.

And we'll talk a little bit more about assets and enterprise value, and there's a little bit of a nuance there, but essentially the company itself.

It's what the market is willing to give for it.

And why don't you like them as much?

I have factory tools worth 500,000, and then that cash will go away.

So here at the beginning of this year, the asset is worth 500,000.

When you take some of your assets and you get the value of the assets that you think they're worth and you pay off some liabilities, it doesn't change the value of your equity.

It's just like you would for a Dollar, Euro, or Yen.

Peter Brabeck