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

I'll just abbreviate that as Nl.

The taxes will be 153,000.

This is 350,000 of net income.

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

This guy makes what is this?

This guy makes 21,000.

So EBlT, I kind of view that it goes backwards.

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

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.

Before Interest and Taxes.

Net profit comes to 10 million dollars every year.

Yep, that's right.

So that's what I'm paying for, arguably.

Company A made 1 per share. 1 of EPS.

And you'll hear these numbers, gross and operating profit and net profit and pretax profit, and it's very hard to understand that these are actually very, very different things, because they all have the word profit, and what does gross and operating and all that mean?

He's not my boyfriend, it's just platonic love with benefits!

So most cash flow statements, they'll start so I'm going to do a cash flow statement right over here

It's part of business aspect of work and making things you don't have to look at the bottom line on

So then you're having, you have your net income, your net income during the period.

And then they'll say well in the most naive interpretation of things, you net income in theory should be the cash you're getting or at least it's some type of profit you're getting assets in the door or at least you're counting as if you're getting some assets in the door.

And why don't you like them as much?

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

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

And this is what goes to the owners of the company.

In return on equity, the numerator is the net income that we got, so it's 350,000.

Our interests clash with theirs.

Minus 500,000.

Because that's not the point of this, but you can apply some tax rate to this and figure out what their net income is.

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.

Net profit for the last three months is a new record high!

Let's compare EBlT to operating profit.

Kill the goose that lays the golden eggs.

Now, in economic theory, cheating is a very simple cost benefit analysis.

A benefit to both our worlds.

Go ahead, eat.

So this is a source of cash, so now the cash from operations 200 net income 400 100

And that's my dad found that.

And that's what these brands did.

FDlC insured.

The rewards would be... enormous.

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

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

Net profit for the period is estimated at 5 billion yen, largely unchanged from the previous one.