So let's call that market equity.

The market value equity of 1.5 billion.

You get a 189,000 market cap for this equity.

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

And this is the market value of the equity, what the market thinks the equity's worth.

And then, that gets you to the market value the equity.

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.

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

They just look purely at the equity value or the market capitalization.

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

But when the market value, or the market cap, is below the book equity, that's the market just saying, hey we're calling your bluff.

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

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

By applying the same price to earnings, we're saying that the market value of this equity is 210,000, while the market value of this equity is what was it? 189,000.

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)

So the market is actually saying, no, you don't have 2 billion of equity, you only have half a billion of equity.

So the market is valuing their equity plus liabilities at 100 and... or 225,000.

And all it is, is what is market valuing the equity part of Ben's company worth

But the market cap is saying what the equity of the company is worth in the market's mind.

Essentially when the market price of my asset dropped, all of that value came out of my equity.

So equity.

Equity tranche.

That's equity.

And 3.00 per share times half a billion shares, that's a 1.5 billion dollar market value of its equity.

And the market cap of the company is really what's the market's guess of what the shareholders' equity is?

That is that private equity has been sniffing around, and that tells me that this market is about to explode.

So the question is what makes up the gap here? when we think about the market value of the equity.

So what if the stock market is saying no, I think that this company's equity is only worth 1.5 billion.

That's my equity.

liabilities plus equity.

This was equity.

left for equity.

liabilities plus equity.

What's my equity?

That's my equity.

liabilities plus equity.

That's my equity.

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

And the equity holders get wiped out, the old equity holders.

Market

Maybe thinking that they were saving, as their home equity in their house grew, or as their stock market portfolio went up.

In the last several videos we talked about the difference between the book value and the market value of a company's equity.

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

Sometimes called stockholders' equity.

It's all his equity.