So now we add an interesting line.

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

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

But in general if you take EBlT and you take out the non operating income, you get back to operating profits.

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

Then whatever this generates is actually non operating income.

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.

So in any of these periods, the depreciation expense should be added back to the operating profit, to figure out the cash from operations.

This was interest. This was non op income.

And then I was left with 1 million.

Minus 500,000.

And these metrics will tell you that.

And that's how much operating profit my widget company has produced.

So these assets might be generating non operating income.

36 percent of the TNCs are in the core only, but they make up 95 percent of the total operating revenue of all TNCs.

And what type of a return can they get?

In this case, an EBlT might be a little bit more informative.

That's what it is generating.

And then, how much am I making from the business now?

So why don't you think about this for a second and tell me, which part was the revenue stream and which part was the pricing tactic.

And so their operating profit, the amount of pre tax income, but you know, we're not considering financing either, so this is their operating profit or their EBlT.

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

Profitable.

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.

And we also assign a value to the company given by the operating revenue.

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

And this is the profit from the operations of the company, or you could say from the assets or from the business or from the enterprise of the company.

So EBlT, in the case that I just added some investment income, would be 1,010,000, while operating profit would be 1 million.

Today, we are going to talk about revenue models.

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

And the way we saw that is that, their everything, their revenue, gross profit all the way down to their operating profit was exactly the same.

Let me write that.

Our profit, once again, is 30,000.

let's actually talk about this for a second.

So a plus b have to be equal to 50.

Get out your pocketbooks, and remember it's all for charity.

And actually, this guy, even if the top line, even if the revenue grew the same and the operating profit grew the same, because of his leverage he would actually grow a

Myself.

But anyway, here I want to figure out what is my return on asset?

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

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 this is the difference between operating income and EBlT.

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

So notice.

Invest financial assistance, but also management assistance.