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.

Minus 500,000.

This is what the owners of the company get before they pay the government.

(Laughter) But I know it's the bottom line, or one's perception of it, that motivates people in the end.

I put my software and IBM together

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.

And each day, the flow of profits and where they go...

I'll just abbreviate that as Nl.

Go ahead, eat.

And when people talk about earnings of a company, this is what they're talking about.

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

Our interests clash with theirs.

Simply put, we hate losing what we've got.

People tend to place a much higher value on losses than on gains.

Our starting cash here is 50,000. It's our ending cash of the previous period.

Kill the goose that lays the golden eggs.

The taxes will be 153,000.

I'm not a charity commissioner.

A benefit to both our worlds.

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

There are also real business benefits.

So you've probably heard not only the term earnings, you've probably also heard the term earnings per share.

They buy more of your service and they tell more of their friends, which leads to more profit.

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.

And that's what these brands did.

FDlC insured.

And that's my dad found that.

The rewards would be... enormous.

The profit will amount to three million dollars.

Before Interest and Taxes.

The reason this is happening boils down, in my mind, to one basic problem, which is our inability to perceive the difference between public benefits and private profits.

This is 350,000 of net income.

This was interest. This was non op income.

This guy makes what is this?

And then I was left with 1 million.

It's good for everybody.

Fair enough.

Why make this thing?

Why isn't it on every poster across the third world?

And we had no expenses in that month.

All they care about is profits.

All the profits go toward Phillip's hospital bills.

And now we're ready to figure out how much money did the operations of this business make?

You'll see this TTM sometimes.