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.

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.

Minus 500,000.

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

This is 350,000 of net income.

This guy makes what is this?

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

Before Interest and Taxes.

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.

So that's a nice thing to keep in the back of your mind, this return on asset concept, and it's very closely tied to operating profits and the actual assets of a firm.

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

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

Net profit comes to 10 million dollars every year.

This guy makes 21,000.

This was interest. This was non op income.

And then I was left with 1 million.

Yep, that's right.

We're better off without the TPP

And these metrics will tell you that.

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

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

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.

Let me write that.

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

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

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?

But in general if you take EBlT and you take out the non operating income, you get back to operating profits.

That's what it is generating.

And then, how much am I making from the business now?

Heavy industry always benefits from war.

I believe it's very important to look at how our society ought to be.

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

Thus The Pirate Bay isn't idealistic.

And so their operating profit, the amount of pre tax income, but you know, we're not considering financing either, so this is their operating profit or their EBlT.

My head I think implicitly made the numbers work out nicely.

They've been good performers in profits and dividends.

And I won't go into all of the details of an income statement, but any income statement you look at will have this operating profit line.

And now we're ready to figure out how much money did the operations of this business make?

Let's say this is what we assume is how many cupcakes we sell.

And this is the profit from the operations of the company, or you could say from the assets or from the business or from the enterprise of the company.