Anyway, going back to Price to Earnings, we calculated the

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

Profitable.

And most of the time, there's no backup for the reported revenues at all.

So a plus b have to be equal to 50.

One of the interesting thing about costs is that in the old days costs and revenue, the minute you started your company, your investors said oh, we know how to track all this.

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

So notice.

Invest financial assistance, but also management assistance.

My head I think implicitly made the numbers work out nicely.

So this kind of the cash income statement,

Maybe Abby made 50 and Ben earned 0.

And we can eyeball it right here.

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

I can do a Price to Earnings on my bank account.

She reckoned that she had earned 1,500 dollars.

She calculated that she had earned 1,500 dollars.

This is just the money directly from the cupcakes.

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

And what's left over for the equity?

So let me switch colors just to ease the monotony.

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

Once you add it all up, though, and with Keller, the revenues are almost 10 less than was actually received.

And we'll make it more complicated in the future

And it's also a valid point or a valid combination from the point of view of the red constraint that Abby and Ben earned 50.

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

Everything on this line would be a valid combination of

So now we add an interesting line.

But for our sake, let's just say that when you give the widget, you have earned the money that they give you, and that's revenue sales.

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

let's do it on an accrual basis.

Abby earned 10 more than Ben.

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

Let's compare EBlT to operating profit.

And why don't you like them as much?

So the price would be 100.

Another type of revenue model is licensing.

It's time to monetise the thing.

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