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

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

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.

Minus 500,000.

They're going to make 0.35 in 2009 as well.

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.

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

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

Kill the goose that lays the golden eggs.

I'll just abbreviate that as Nl.

Go ahead, eat.

Our interests clash with theirs.

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

Fair enough.

All they care about is profits.

So this is trailing 12 months.

I do want to leave you with one positive thought.

So this is trailing 12 months earnings.

No gains without pains.

You could also have forward earnings.

We know how much it takes to build our product.

So, that's one general conclusion about why societies make bad decisions conflicts of interest.

The taxes will be 153,000.

I'm not a charity commissioner.

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

And if we see how they graphed things here, on the vertical axis, what we normally associate with the y axis, they graphed Abby's earnings.

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

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

No pain, no gain.

Benefits are in effect.

The people would become the defenders of that forest.

He was a good another.

And so I actually raised prices.

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 that's what these brands did.

FDlC insured.

And that's my dad found that.

The rewards would be... enormous.

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 paint can right here saved the Dutch Boy paint company, making them a fortune.

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

Now we can do another notion, and that's return on equity.