Minus 500,000.

Kill the goose that lays the golden eggs.

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.

He claimed his share of the profits.

And you could guess what the next line is going to be, given that this says pre tax.

They have no interest expense, because that's not the point of this video.

So you take the interest out.

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.

He derived a lot of profit from the enterprise.

His business returned a good profit.

Ten percent of all future profits from his solo venture.

Our interests clash with theirs.

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?

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.

And now we are left with our we're getting close to where we need to get to pre tax income.

But just so you know what EBlT is, EBlT is just Earnings

A benefit to both our worlds.

I'll just abbreviate that as Nl.

Utilities are still rewarded when their customers waste energy.

Go ahead, eat.

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

THE MONETARY SYSTEM

And that's my dad found that.

And that's what these brands did.

FDlC insured.

The rewards would be... enormous.

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

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

And let's say, assume if I inherited this million dollars, I didn't finance it.

The company's profit amounted to 250 million before tax.

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.

The reason this is happening boils down, in my mind, to one basic problem, which is our inability to perceive the difference between public benefits and private profits.

This is 350,000 of net income.

Why make this thing?

All the profits go toward Phillip's hospital bills.

The taxes will be 153,000.

I'm not a charity commissioner.

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

It's also important to think about what the benefit is.

So now look at the different lens.

Peter The greatest benefit to all.

And so you can already imagine that both EBlT and the way I defined it initially, operating profit divided by assets.

I did in that last video it might be interesting to say, is that the pre tax or the post tax return on asset.