So EBlT, I kind of view that it goes backwards.

Before Interest and Taxes.

And when people talk about earnings of a company, this is what they're talking about.

I'll just abbreviate that as Nl.

The taxes will be 153,000.

Yep, that's right.

This guy makes 21,000.

This is 350,000 of net income.

We are assuming a very simple world, were the is no taxes, we have no debt, we have no intrest or things

And at least it'll give you a sense of how revenues, gross profit, operating profit, pre tax income and net income really are different.

This guy makes what is this?

So you've probably heard not only the term earnings, you've probably also heard the term earnings per share.

Net profit comes to 10 million dollars every year.

So most cash flow statements, they'll start so I'm going to do a cash flow statement right over here

Minus 500,000.

So that's what I'm paying for, arguably.

And you'll hear these numbers, gross and operating profit and net profit and pretax profit, and it's very hard to understand that these are actually very, very different things, because they all have the word profit, and what does gross and operating and all that mean?

And then they'll say well in the most naive interpretation of things, you net income in theory should be the cash you're getting or at least it's some type of profit you're getting assets in the door or at least you're counting as if you're getting some assets in the door.

Company A made 1 per share. 1 of EPS.

So now look at the different lens.

Our interests clash with theirs.

So this is a source of cash, so now the cash from operations 200 net income 400 100

Because that's not the point of this, but you can apply some tax rate to this and figure out what their net income is.

He's not my boyfriend, it's just platonic love with benefits!

Why isn't it on every poster across the third world?

And we had no expenses in that month.

It's part of business aspect of work and making things you don't have to look at the bottom line on

So then you're having, you have your net income, your net income during the period.

And why don't you like them as much?

This is really important to pay attention to, because so many people say, oh, a company made this much.

But here you see it means very, very different things.

They buy more of your service and they tell more of their friends, which leads to more profit.

And this is what goes to the owners of the company.

In return on equity, the numerator is the net income that we got, so it's 350,000.

That's what it is generating.

There is no doubt about what they have done.

No one wants it to go off.

They obtained a yield of 8 percent on their investment.

And so I had a total expense or total cost of goods sold of 1 million.

This is what the owners of the company get before they pay the government.

(Laughter) But I know it's the bottom line, or one's perception of it, that motivates people in the end.

Ten percent of all future profits from his solo venture.

Net profit for the last three months is a new record high!

Let's compare EBlT to operating profit.

Kill the goose that lays the golden eggs.