But the reason I wanted do to Earnings to Price is because it connects it back to things like yield and interest.

Not anymore.

So a plus b have to be equal to 50.

Profitable.

Maybe Abby made 50 and Ben earned 0.

And we can eyeball it right here.

At the end of the month we count your clicks

This is Earnings Per Share, not total earnings.

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

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

So now we add an interesting line.

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

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

So in 2013 you'll be making 16.

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

So notice.

Invest financial assistance, but also management assistance.

Let's compare EBlT to operating profit.

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

We're going to take a write down.

How is it that you make money?

It's just a faster way of saying

It's just 10 because one, this is a nice round number.

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

And what's left over for the equity?

So let me switch colors just to ease the monotony.

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

But today we re going to be talking about revenue streams.

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

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

And it's also a valid point or a valid combination from the point of view of the red constraint that Abby and Ben earned 50.

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

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looks neutral.

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

Everything on this line would be a valid combination of

Instead of doing this present value calculation for everything, and there's so much error involved anyway, in terms of just estimating earnings, people just give a rule of thumb.

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

What are my most expensive resources? What are my most expensive activities?

Under federal asset seizure the government can take the entire house.

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

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

So a lot of people immediately will figure out the Price to

Anyway, going back to Price to Earnings, we calculated the