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

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

Kill the goose that lays the golden eggs.

We know how much it takes to build our product.

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.

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

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

I was actually interfering with the process with lots of good intentions.

I do want to leave you with one positive thought.

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 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 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?

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

And then if you subtract your costs from your revenue, or if you just add these two numbers, because this one is negative, you have your gross profit.

So, that's one general conclusion about why societies make bad decisions conflicts of interest.

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

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

We had marginal profit I did.

So, let's see, you have to do 1.85.

He had a favourite phrase which he kept on repeating triumphantly, The minimum of risk with the maximum of profit is my motto.

But you know, these stories, and lots of other experiments that we've done on conflicts of interest, basically kind of bring two points to the foreground for me.

They have no interest expense, because that's not the point of this video.

With trade, there's mutual interdependency and mutual gain between parties.

I asked them all.

But what do you do when the two come into conflict and you're forced to make a decision that either is in Britain's interest, or the interest of Britons, or citizens elsewhere in the world?

It's good for everybody.

But again, fun is not enough.

He was a good another.

What's in it for the institution?

Science comes first, but business comes a close fucking second.

But when you lower the Price to Earnings you are increasing the Earnings to Price.

I'm only looking out for what's best for both of us.

The assets are generating this.

Then the companies or those factories or whatever you want to think of them,

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

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

Our interests clash with theirs.

Minus 500,000.

They're generating the operating profit, and that's a very important thing to realize in the future when we talk about return on assets.

People do not enslave people to be mean to them.

All they care about is profits.

This is 350,000 of net income.

I don't know what the exact equation is gonna look like, but it's gonna be downward opening.

The taxes will be 153,000.