So its assets.

These are my assets, and these are my liabilities.

It should start to make a little bit of intuitive sense

And so that cash ended up here.

So they really had, let's see, they had an 80,000 loan, a 250,000 asset, so they really had 250,000 minus 80,000, that's 170,000.

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

That assets, A for assets, is equal to

I'll do that in yellow.

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

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

So this is just another visual representation that

Malibu Equity and Investments.

And what I wrote here is, it has 4 billion of liabilities.

He is a man of wealth.

He's a wealthy man.

So obviously there's no two companies that are identical in this way, but let's say that they are.

I don't want to draw this box.

And rich, eh?

Remember liabilities plus equities are equal to assets.

I'll draw it a little bit bigger.

And then whatever assets I get I would have to sell it.

But it's roughly the right number.

Each share in this case once again, if you believe that the assets are worth 1 million are going to be 1 million.

But when I talk about the asset, I'm talking about only the operating assets.

All of the assets needed to start the firm, the pizzeria.

But let's just kind of think about a generic balance sheet for a bank.

Are you a man of means?

Malibu Equity and Investments. Roger Van Zant.

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.

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

So this is assets.

So I have 100 plus 300 plus 250 so it's 100.

So in general if you want to know what I think is the best

liabilities plus equity is equal to assets.

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

My liabilities would be 145,000.

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

So this is my liabilities.

I won't use the square tool.

So this is the assets.

I've gone over all of it with your money managers.

Obviously , a machine you can't do all of those things to it, but you can at least touch it and possibly smell and taste it.

liabilities plus equity.

liabilities.

So that's the situation we're dealing with.