So a plus b have to be equal to 50.

It was 10.

Profitable.

But the point is, we are architecting access here, for what purpose?

Invest financial assistance, but also management assistance.

And we can eyeball it right here.

Are you using the past 12 months earnings?

Maybe Abby made 50 and Ben earned 0.

Well Company A is more steady, so that's one reason.

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

And what's left over for the equity?

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

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

So notice.

Everything on this line would be a valid combination of

Abby earned 10 more than Ben.

And why don't you like them as much?

So the price would be 100.

Another type of revenue model is licensing.

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

So let me switch colors just to ease the monotony.

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

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

What does that tell us?

It's just a faster way of saying

So now we add an interesting line.

So growth is the other reason why you're willing to pay a higher Price to Earnings ratio.

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

So that's a little bit of a taste of why someone might realistically, in this case, pay a higher Price to Earnings for safety.

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

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

And so I'm left with net income of 350,000.

But I just want to give you the gist of what's happening.

They're going to make 0.35 in 2009 as well.

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

Let's compare EBlT to operating profit.

It's time to monetise the thing.

Obviously a 6 Price to Earnings of 20 times 2013 earnings isn't as good as a 6 Price to Earnings of 2010, because earnings in the future aren't worth as much as earnings today.

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

We talked about the potential ways to charge

The return on the investment will be high.

So you say, they both deserve a price to earnings of 10.

Instead we could say that file sharing is good.

We learned that in our first video.

In this case, we use last year's earnings.