He had a favourite phrase which he kept on repeating triumphantly, The minimum of risk with the maximum of profit is my motto.

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.

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

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

Our interests clash with theirs.

Minus 500,000.

I'm not a charity commissioner.

This is just my notation.

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 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.

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

I'll just abbreviate that as Nl.

Go ahead, eat.

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

Before Interest and Taxes.

And it doesn't matter over what

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

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.

You can only sell luck in an unequal society because you offer a life changing reward. The monetary system is based on profit leading indirectly to corruption, any game can also be corrupted.

Kill the goose that lays the golden eggs.

The taxes will be 153,000.

A benefit to both our worlds.

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

The people would become the defenders of that forest.

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.

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

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?

To go to war, to free people from an outside aggressor, is noble

And that's what these brands did.

FDlC insured.

And that's my dad found that.

The rewards would be... enormous.

I went shares with my cousin in the profits.

Essentially when the market price of my asset dropped, all of that value came out of my equity.

Like so many nickels and dimes.

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

This is 350,000 of net income.

This was interest. This was non op income.

This guy makes what is this?

And then I was left with 1 million.

It's good for everybody.

Fair enough.

Why make this thing?