Fair enough.

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

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

I made a good profit by selling my car.

Minus 50,000.

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.

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

I made a good profit by selling my car.

So what's the profit going to be? So let me write this down.

So, you're selling costs were embedded here, this was the commission or direct sales costs or whatever you were paying your direct sales people and you made 37 selling directly.

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

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

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.

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.

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.

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

So let's say I just want to know what has to happen for my operating profit to be zero.

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

It is a better business model.

So already we have some new nuance on profit.

So it's 1 million per year.

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.

I'll just abbreviate that as Nl.

Over here, this axis right here is going to be the selling price,

Go ahead, eat.

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

Our interests clash with theirs.

A retail merchant buys wholesale and sells retail.

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

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

Kill the goose that lays the golden eggs.

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

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

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.