Fair enough.

So my operating profit is really my profit because I don't have to pay taxes on it.

Minus 50,000.

So I'll do a line here. I'll subtract that from that.

And I'll write it as a negative number because we're going to subtract it from the gross profit.

In order for this to come out to be zero, the gross profit has to be 500,000.

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

And I think you already get the sense that the lower the

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

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So this is a break even scenario, where I sell 500,000 cupcakes at 2 per cupcake, with this being the cost of goods.

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.

You might say, oh that's great! You're making a million dollars on your cupcake factory in this scenario, and oh no, we're not done yet.

I made a good profit by selling my car.

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.

I made a good profit by selling my car.

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The company earned 300 million on sales of 4,000 million.

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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.

It is a better business model.

The rise in house prices enabled him to sell his house at a big profit.

And it has been a powerful marketplace differentiator, increasing sales and profits.

The rewards would be... enormous.

Just kind of the money I'm getting from selling the cupcakes, and that term is called gross profit.

I mean, how big is the group overall?

Have a look at the gap.

We saved Ford 35 million dollars doing it this way, day one, which is the equivalent of the Ford Taurus at a four percent margin of an order for 900 million dollars worth of cars.

Company A made 1 per share. 1 of EPS.

And when they produce their crops, they sell the surplus on marketplaces.

The tickets cost 29 each.

There is no doubt about what they have done.

Peter The greatest benefit to all.

And so I had a total expense or total cost of goods sold of 1 million.

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

So if we could chop that away and give the building a small bottom, we could take that bit and put it at the top where the greater commercial value is for a property developer.

If you and I one sell individually what little we produce,

Mom and pop stores will turn a profit in the new fiscal year.

He made a profit of ten thousand dollars on the sale.

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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.

Before I think about how much does it cost for me, all of the overhead expenses.

And then they benefit through the exposure, advertising and linked sales.