Money lenders are enjoying a profitable period.

And so you can already imagine that both EBlT and the way I defined it initially, operating profit divided by assets.

The assets are generating this.

Are the profits exclusive of taxes?

Before Interest and Taxes.

They obtained a yield of 8 percent on their investment.

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

EBlT in this case would be the operating profit plus this investment income.

So it makes sense, this is right here, this is our demand, our demand curve, so all the people who will get more than 5 benefit out of the money, maybe they have an investment where they can get 10 on the money or 8 , or 5.1 , they're all willing to borrow that money and then invest it in whatever they want to do, or this might even be consumption, people who say hey, 5 , that's worth it for me to go out and buy that thing that makes me whatever happy.

If hundreds of people didn't buy this, we couldn't put it on the market.

The loan bears an 8 interest.

She benefited from the sound investment.

So this is the operating profit. This is the money that just comes out of the asset itself.

You'll be a member of a democratically controlled investment opportunity who's primary role, after return to investors, shareholders, members, is returned to the community.

It describes it right over here the change in equity, sometime the change in retained earnings, or just change in equity, that is going to be the 200 in net income that the company got over that time period.

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.

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.

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

Help me fight for environmental and economic justice.

So this is lending some cash.

Minus 500,000.

Interest is nothing but rent.

This new investment will multiply our profit.

But anyway, here I want to figure out what is my return on asset?

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.

Also, going to the small business administration or getting SBlR grants also fit into the financing column.

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

Do Low Interest Rates Ensure High Asset Prices?

Stock investments do not always yield profit.

The price of money will go down, that's what the federal funds rate is, it's the target rate, so I'll say Fed Funds Rate, it's the target rate that the Fed sets for the overnight borrowing of reserves between banks, that's the Federal Funds Rate, and it will go down and that's how the Fed tries to set the Federal Funds Rate.

It's before we think about how the business is structured.

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

So the for profit sector can pay people profits in order to attract their capital for their new ideas, but you can't pay profits in a nonprofit sector, so the for profit sector has a lock on the multi trillion dollar capital markets, and the nonprofit sector is starved for growth and risk and idea capital.

I'll just abbreviate that as Nl.

And so their operating profit, the amount of pre tax income, but you know, we're not considering financing either, so this is their operating profit or their EBlT.

Go ahead, eat.

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

Our interests clash with theirs.

last year, they made profits of over 700 million dollars and over 500 million dollars respectively.

So cash could be an asset.

There are mechanisms that you can make hundreds of billions of dollars annually and defray a huge chunk of the cost of this just on the Chicago Mercantile Exchange, playing with derivatives in the weather market.

So this is the treasury yield curve.

And you could guess what the next line is going to be, given that this says pre tax.

(Laughter)