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

Then the companies or those factories or whatever you want to think of them,

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 again, fun is not enough.

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

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.

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

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

It's good for everybody.

So, let's see, you have to do 1.85.

Price to Earnings is 1.75 divided by 0.35, would now be a 5 Price to Earnings.

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.

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

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

Why make this thing?

And so I actually raised prices.

And then if you subtract your costs from your revenue, or if you just add these two numbers, because this one is negative, you have your gross profit.

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

In your country, there might be the equivalent of government fund.

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

So in month 4, we can actually put it in our income statement at 200, and then we had 100 of expenses, so that we have this 100 right over here.

So my operating profit here is 1 million.

But when you lower the Price to Earnings you are increasing the Earnings to Price.

The assets are generating this.

But very, very few people or organizations know why they do what they do.

What's in it for the institution?

This is 350,000 of net income.

And then I was left with 1 million.

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

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

Maybe it was 4 , or 3.5 .

And that's going to more than offset the payoffs that they need to give for the people who are just randomly ran accident or who die for whatever reason

Even if it benefited the publishers, it was a creative right and author's right.

We know how much it takes to build our product.

So what they do is they just take your earnings number and you divide by the number of shares.

Utilities are still rewarded when their customers waste energy.

Minus 500,000.

With trade, there's mutual interdependency and mutual gain between parties.

So already we have some new nuance on profit.

If this technology is widely adopted,

But, of course, that's not the money that we get to take home, because we have to pay this interest.

These are the only people who really have, arguably the sophistication and the time and the monetary incentive to really look and scrutinize what management is doing.

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