Ratio limit

Over the next few years big decisions will be made in Washington on jobs, the economy, taxes and deficits, energy, education, war and peace.

So over here you had another liability.

Most times the liabilities are pretty easy to get a handle on.

Gain Restricted

To pay off his debt,

So now I have this liability.

This was equity.

So liabilities. Liabilities.

Let's say assets and I'll talk about margin requirements

This is the angel investor, and this is all of us down here, and all of this is equity.

It had 5 million of debt.

What I could do is maybe 100 of it,

And they got an asset called loan to Bank A.

And let's say that's all of their liabilities.

I'll continue the example in the next video, and I'll explain a little bit about the tax savings from carrying debt or interest.

I still owe 750,000 to bank.

So my liabilities I owe the bank 750,000.

And then we have the debt, the debt of the company, or the

Let's think about its liabilities.

And then we have a little bit of cash on top of that.

So let's say these are debt holders right here.

I owe the bank 750,000.

That we'll just put generally as liability.

This income tax saving from interest deduction, this is assuming that at that marginal tax rate, you can deduct the property tax and the interest on the debt.

Let me just make everything clear.

So where does this lead?

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

Right?

liabilities.

His debts amount to more than he can pay.

Her debts amount to more than she can pay.

Roads and bridges were crumbling. Business taxes were up, and business confidence was down.

liabilities as well.

What are my liabilities?

That assets, A for assets, is equal to

Now no matter what, this company cannot go bankrupt.

He is immune from taxes.

Or the other way to view it is, assets minus liabilities is equal to equity, right?

The new tax system comes into effect next year.

It should start to make a little bit of intuitive sense

What I'm squaring off in blue, that's the

But these people had equal weight with these guys.

I won't go into that too much, but I think you get the idea what I mean, part lender.

So you have an Accounts Payable liability of 100 sorry, at this point we had no Accounts Payable liability and then after the end of the month we have an Accounts Payable liability of 100.