The return on the investment will be high.

Why wouldn't I just pour all of my money?

It looks like our profit is jumping all over the place.

The company's profitability improved.

So this is trailing 12 months.

So a plus b have to be equal to 50.

Profitable.

Invest financial assistance, but also management assistance.

And we can eyeball it right here.

At any given price point, higher quantity demanded.

Maybe Abby made 50 and Ben earned 0.

Let's say that we don't know that they're truly equal.

Because when someone says earnings, are those the earnings last year?

And what's left over for the equity?

The earnings I just said, this is actually what happened to the company.

Sometimes we're profitable. Sometimes we're not.

So this one's worth a little bit more, because it's earning a little bit more money.

And the first one is that this whole idea about revenue stream, Steve, I get it.

So now we switched places.

So let's look at them over the course of one year.

So notice.

Everything on this line would be a valid combination of

It's called the Extractive Industries Transparency Initiative.

And we add back the interest, at least in this example, we get to an operating profit number.

Abby earned 10 more than Ben.

And why don't you like them as much?

So the price would be 100.

Another type of revenue model is licensing.

The reason why you are willing to pay a higher Price to

So let me switch colors just to ease the monotony.

And they were male and female 18 30 and they were casual fans.

When? I said it's time to monetise the site.

We talked about the potential ways to charge

So growth is the other reason why you're willing to pay a higher Price to Earnings ratio.

What does that tell us?

It's just a faster way of saying

So now we add an interesting line.

So that's a little bit of a taste of why someone might realistically, in this case, pay a higher Price to Earnings for safety.

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

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

One of the viewers pointed out not incorrectly that one definition of return on asset so this whole video's going to be on return on asset that one definition of return on asset, and if you look it up on some of the finance sites or even some finance textbooks, they'll tell you it's net income over total assets.

And so I'm left with net income of 350,000.

But I just want to give you the gist of what's happening.

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

And that's because they have the same exact asset.