So operating profit.

So their operating profit.

This was operating profit.

This is just the gross profit.

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?

So this is operating profit.

And then we have their gross profit.

Let's compare EBlT to operating profit.

And this is called operating profit.

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.

So both of their gross profit is 50,000.

And the way we saw that is that, their everything, their revenue, gross profit all the way down to their operating profit was exactly the same.

So what does the gross profit have to be?

So my operating profit here is 1 million.

It's from the business itself, operating profit, and since these are identical businesses, they have the same exact operating profit.

So gross profit, I'm making 1 million. Two minus one.

Let's calculate this number first before I go off on one of my tangents on all the differences between the operating and the gross profit.

Gross, gross, Sen!

And that's how much operating profit my widget company has produced.

They're the things that are needed to generate the operating profit.

So if my operating profit is zero, we know my overhead.

So my operating profit is really my profit because I don't have to pay taxes on it.

And then I'll make 500,000 gross profit and then, take out the overhead.

You add the profit to the depreciation, you get a 50,000 operating profit same as the previous year.

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.

So let's see, I got gross profit just from selling the cupcakes a million.

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

While operating profit, you start at the top line and you go down.

Gross!

Gross.

Gross.

Gross.

Gross.

Gross!

Gross.

And then the very first definition I gave you was operating profit over assets.

That's 500,000 a year. So my operating profit is 500,000 and that's pretty good.

That's gross.

Gil Gross

Oh, gross.

Totally gross

It's gross.

It's gross.

In order for this to come out to be zero, the gross profit has to be 500,000.

Just kind of the money I'm getting from selling the cupcakes, and that term is called gross profit.