Profitable.

Instead of doing this present value calculation for everything, and there's so much error involved anyway, in terms of just estimating earnings, people just give a rule of thumb.

So a plus b have to be equal to 50.

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.

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.

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

So notice.

Invest financial assistance, but also management assistance.

Maybe Abby made 50 and Ben earned 0.

And we can eyeball it right here.

Because when someone says earnings, are those the earnings last year?

The reason why you are willing to pay a higher Price to

And what's left over for the equity?

So let me switch colors just to ease the monotony.

And they were male and female 18 30 and they were casual fans.

Is it a license or subscription model?

Price to Earnings, all else equal and that's a big thing all else equal, the lower the Price to Earnings, you're paying less for something.

The earnings I just said, this is actually what happened to the company.

Everything on this line would be a valid combination of

So now we add an interesting line.

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

So it's a function of t, for tickets.

We study again our die. You observe the following sequence 1, 2, 3, 2.

He borrowed a large sum of money on the strength of expected income.

Abby earned 10 more than Ben.

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

Let's compare EBlT to operating profit.

And why don't you like them as much?

So the price would be 100.

Another type of revenue model is licensing.

It's time to monetise the thing.

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Supposed suicide.

And how they were going to create demand was through search ads, social media, stadium promotions.

What's the estimate?

Are you with me?

And the first one is that this whole idea about revenue stream, Steve, I get it.

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

What does that tell us?

At the end of the month we count your clicks

This is Earnings Per Share, not total earnings.

It's just 10 because one, this is a nice round number.

It's the same plot.