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Re: Mo-John post# 6210

Friday, 02/17/2012 6:21:41 PM

Friday, February 17, 2012 6:21:41 PM

Post# of 17104
"NO - "Profit Margins" (not profits, not net income, not taxable income etc..) and "EPS" are two very different numbers and computations."

Firstly, you're not going to do me a service by trying to "teach" me anything about finance. A) I graduated with a degree B) Engage in its use as a full time living C) Have done so for nearly 20 years now and D) never stated that profit margin and EPS were the same thing. But, I do appreciate your convictions.

"EPS is buttom line net income of a corporation."

Exactly what I said.

"Its what you apply the PE ratio to for valuing a corporation."

No it isn't. EPS is what is used in order to DERIVE the P/E metric. You don't APPLY the EPS to the P/E, it's where the P/E comes from.

"So for valuing NNLX corp. its a net income amount that needs to be computed. HOWEVER, in valuing the NNLX's products you use profit margins (a sub-set of data within net income) to detmine it is value."

There are so many ways to valuing a business, none in which I'm interested in debating with you about.

The profit margin of a business is simple. Net Income divided by Total Revenue. Simple as it gets and non-debatable.
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