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

Utilities are still rewarded when their customers waste energy.

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.

We know how much it takes to build our product.

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

Kill the goose that lays the golden eggs.

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

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.

It's good for everybody.

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.

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.

(Laughter)

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

Minus 500,000.

The taxes will be 153,000.

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

But again, fun is not enough.

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.

You should work in the interests of humanity.

And I don't have enough time to talk about all of them, but think about self interest.

Science comes first, but business comes a close fucking second.

What's in it for the institution?

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

But when do you have pizza?

So, whatever wasn't used in the expenses would end up being profit, and then all of that went back to that one household as income.

They're generating the operating profit, and that's a very important thing to realize in the future when we talk about return on assets.

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

I'll just abbreviate that as Nl.

The assets are generating this.

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

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

Go ahead, eat.

Our interests clash with theirs.

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.

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

And we had no expenses in that month.