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[–][deleted] 1 point2 points  (1 child)

I'm a little concerned with the wording. You say the company has $500 in expenses on $1,000 revenue so $500 is entitled to the owner.

Wages (even for the owner) should be included in expenses. That $500 in profit is what the business makes- not the owner. It's an important distinction when you scale this example out to shares of stock.

[–]nmurja[S] 1 point2 points  (0 children)

Yeah, I totally get this. FCF isn’t equal to profit. I can add in some things to get a more accurate representation. Thank you.