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.

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

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.

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.

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

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.

Have a look at the gap.

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

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

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

I made a good profit by selling my car.

It is a better business model.

The tickets cost 29 each.

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

There is no doubt about what they have done.

I mean, how big is the group overall?

Company A made 1 per share. 1 of EPS.

So essentially, you're able to achieve quite high rates of condom use in commercial sex.

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

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.

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

I made a good profit by selling my car.

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

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

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

This is Earnings Per Share, not total earnings.

That's kind of a lot of money

This is a pretty profitable business, more profitable than most.

Anyway, I want to leave you there.

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

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

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

I'm only looking out for what's best for both of us.

So it's 1 million per year.

And you're going to pay a lower Price to Earnings ratio if the company isn't growing.

I'll just abbreviate that as Nl.

Or if we just wanted to round to the nearest penny, since we're talking about selling something, this optimal profit, this optimal profit, will happen at a selling price of 23 and 30, 23 and 33 cents.