Now we can do another notion, and that's return on equity.

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.

And so we took this number as the numerator and we divided by the number of assets.

So this is trailing 12 months earnings.

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

And these metrics will tell you that.

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

Minus 500,000.

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.

I do want to leave you with one positive thought.

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

Kill the goose that lays the golden eggs.

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

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

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

I'll just abbreviate that as Nl.

Go ahead, eat.

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

But you can see there's a problem here.

Our interests clash with theirs.

No pain, no gain.

But again, fun is not enough.

So what are they?

It's a special interest group?

And I think this is an interesting thing.

So, it was not necessarily a bad thing.

What's in it for the institution?

All they care about is profits.

All the profits go toward Phillip's hospital bills.

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

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

When the price of the treasury security goes up, as happened in this case the yield, or the interest, that you are getting on your loan goes down in either situation, you're going to get your 1000 dollars back. if you're lending 950 and get 1000 dollars back, you'll get 5.3

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?

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

The taxes will be 153,000.

I'm not a charity commissioner.

A benefit to both our worlds.

It is to his advantage.

It's also important to think about what the benefit is.

And this is, I think, a perfect example of what Robert Wright was talking about in those non zero sum things.

We know how much it takes to build our product.

No one wants it to go off.