Warren Buffett's Guide to Using Financial Statements
 |
Description
Book Introduction
This book introduces techniques for utilizing financial statements that can be applied anytime and anywhere, transcending time and space. It specifically reveals the method of utilizing financial statements by investment guru Warren Buffett.
This book focuses on Warren Buffett's investment know-how in selecting blue-chip stocks using financial statements. It also provides answers to questions about which financial statement items Warren Buffett focuses on and what meaning he attaches to them when evaluating companies.
Author Mary Buffett, Warren Buffett's former daughter-in-law and a member of the family for 12 years, wrote the content of this book based on her experience observing Warren Buffett up close.
The author explains the characteristics of "companies with long-term competitive advantages"—that is, blue-chip blockbuster stocks—from a financial statement perspective, imparting knowledge of how the world's best stock investors view and utilize each individual line item in financial statements.
This book focuses on Warren Buffett's investment know-how in selecting blue-chip stocks using financial statements. It also provides answers to questions about which financial statement items Warren Buffett focuses on and what meaning he attaches to them when evaluating companies.
Author Mary Buffett, Warren Buffett's former daughter-in-law and a member of the family for 12 years, wrote the content of this book based on her experience observing Warren Buffett up close.
The author explains the characteristics of "companies with long-term competitive advantages"—that is, blue-chip blockbuster stocks—from a financial statement perspective, imparting knowledge of how the world's best stock investors view and utilize each individual line item in financial statements.
- You can preview some of the book's contents.
Preview
index
Recommendation and Summary: Lee Min-joo, Director of the Warren Buffett Institute
Translator's Note: Kim Sang-woo
Introduction: Mary Buffett
Part 1 - Warren Buffett's Key Points for Successful Investing
1.
Two Ways Buffett Made the World's Richest Man
2.
The Truth About Investing That Even the Father of Value Investing Didn't Know
3.
The characteristics of super-high-quality stocks that will make you rich
4.
Grab your ticket to riches
5.
Ten-bagger stocks hidden in financial statements
Part 2 - Looking at the Income Statement Through Warren Buffett's Eyes
6.
Income Statement: The First Financial Statement Buffett Looks At
7.
Sales: Items to Review Along with Expenses
8.
Cost of goods sold: What items are included?
9.
Gross Profit and Gross Profit Margin: A Useful Measure of a Good Company
10.
Operating expenses: An item Buffett always cares about.
11.
Selling and administrative expenses: If they are consistently low, it's a bonus.
12.
Research and Development: Buffett's Favorite Expense
13.
Depreciation: Always include it as an expense when calculating profit.
14.
Interest Expenses: A Prelude to Disaster
15.
Gains and losses on disposal of assets and other non-operating income and losses: Recognize them as one-time events.
16.
Net income before taxes: Buffett uses this to compare companies.
17.
Corporate Tax: Weeding Out Liars
18.
Net Income: Buffett's Two Interpretations
19.
Earnings per share: Look at the 10-year trend.
Part 3 - Viewing the Balance Sheet Through Warren Buffett's Eyes
20.
Balance Sheet: A snapshot of a company's current financial health.
21.
Assets: Property owned by the company
22.
The Circulation of Current Assets: The Process by which a Company Makes Money
23.
Cash and Cash Equivalents: The Spear and Shield of a Business
24.
Inventory: Find companies with rising net income.
25.
Accounts Receivable: Focus on companies that have a steady flow of cash and are able to collect quickly.
26.
Prepaid Expenses and Other Current Assets: Not Very Helpful in Determining Competitive Advantage
27.
Total Current Assets and Current Ratio: The More the Better, But There Are Exceptions
28.
Tangible assets: Companies that constantly require investment are not good.
29.
Goodwill: Where Investment Opportunities Hide
30.
Intangible Assets: Calculating the Intangible Value
31.
Long-Term Investment Assets: Like the Magic Kiss That Turns a Frog into a Prince
32.
Other non-current assets: Items that do not help in determining competitive advantage.
33.
Total Assets and Return on Assets: A Glimpse into Buffett's Unique Perspective
34.
Current Liabilities: Examining Their Relevance to Competitive Advantage by Item
35.
Accounts Payable, Accrued Expenses, and Other Current Liabilities: Not Helpful in Determining Competitive Advantage
36.
Short-term debt: Avoid financial institutions with more long-term debt than short-term debt.
37.
Liquid Long-Term Debt: Jackpot or Flood?
38.
Total Current Liabilities and Current Ratio: Is a Ratio Below 1 Always a Bad Company?
39.
Non-current liabilities (long-term debt): Consider these when looking for long-term investments.
40.
Deferred income taxes, minority interests, and other liabilities: different types of liabilities
41.
Debt-to-Equity Ratio: Considering Treasury Stock
42.
Capital: The money that shareholders initially invested and still have left over
43.
Preferred stock, common stock, and capital surplus: Good companies rarely have preferred stock.
44.
Retained Earnings: The Secret to Buffett's Wealth
45.
Treasury Stock: A Necessary Condition for Blue Chip Stocks
46.
Return on Equity 1: Find a company that makes good use of shareholders' money.
47.
Return on Equity 2: Invest if it's high, don't invest if it's low.
48.
The Problems and Caveats of Leverage: A "Sick Chicken" Can Become a "Golden Goose"
Part 4 - Viewing the Cash Flow Statement Through Warren Buffett's Eyes
49.
Cash Flow Statement: A Very Useful Indicator for Identifying Good Companies
50.
Capital Expenditures: Why Buffett Doesn't Invest in Telephone Companies
51.
Buying Back Your Own Stock: Another Tax-Free Source of Income
Part 5 - How to Buy and Sell the Best Stocks at the Best Time
52.
Buffett's revolutionary stock investment idea
53.
Long-term competitive advantage consistently increases investment returns.
54.
Other ways to evaluate the best stocks
55.
The best time to buy fantastic stocks
56.
How to Find the Best Selling Timing
supplement
1.
Examples of financial statements for healthy and poor companies
2.
Key Accounting Terms
3.
Translator's note
4.
Company English name and index
Special Appendix - A customized video lecture CD (1 hour) that makes this book even easier to understand.
Translator's Note: Kim Sang-woo
Introduction: Mary Buffett
Part 1 - Warren Buffett's Key Points for Successful Investing
1.
Two Ways Buffett Made the World's Richest Man
2.
The Truth About Investing That Even the Father of Value Investing Didn't Know
3.
The characteristics of super-high-quality stocks that will make you rich
4.
Grab your ticket to riches
5.
Ten-bagger stocks hidden in financial statements
Part 2 - Looking at the Income Statement Through Warren Buffett's Eyes
6.
Income Statement: The First Financial Statement Buffett Looks At
7.
Sales: Items to Review Along with Expenses
8.
Cost of goods sold: What items are included?
9.
Gross Profit and Gross Profit Margin: A Useful Measure of a Good Company
10.
Operating expenses: An item Buffett always cares about.
11.
Selling and administrative expenses: If they are consistently low, it's a bonus.
12.
Research and Development: Buffett's Favorite Expense
13.
Depreciation: Always include it as an expense when calculating profit.
14.
Interest Expenses: A Prelude to Disaster
15.
Gains and losses on disposal of assets and other non-operating income and losses: Recognize them as one-time events.
16.
Net income before taxes: Buffett uses this to compare companies.
17.
Corporate Tax: Weeding Out Liars
18.
Net Income: Buffett's Two Interpretations
19.
Earnings per share: Look at the 10-year trend.
Part 3 - Viewing the Balance Sheet Through Warren Buffett's Eyes
20.
Balance Sheet: A snapshot of a company's current financial health.
21.
Assets: Property owned by the company
22.
The Circulation of Current Assets: The Process by which a Company Makes Money
23.
Cash and Cash Equivalents: The Spear and Shield of a Business
24.
Inventory: Find companies with rising net income.
25.
Accounts Receivable: Focus on companies that have a steady flow of cash and are able to collect quickly.
26.
Prepaid Expenses and Other Current Assets: Not Very Helpful in Determining Competitive Advantage
27.
Total Current Assets and Current Ratio: The More the Better, But There Are Exceptions
28.
Tangible assets: Companies that constantly require investment are not good.
29.
Goodwill: Where Investment Opportunities Hide
30.
Intangible Assets: Calculating the Intangible Value
31.
Long-Term Investment Assets: Like the Magic Kiss That Turns a Frog into a Prince
32.
Other non-current assets: Items that do not help in determining competitive advantage.
33.
Total Assets and Return on Assets: A Glimpse into Buffett's Unique Perspective
34.
Current Liabilities: Examining Their Relevance to Competitive Advantage by Item
35.
Accounts Payable, Accrued Expenses, and Other Current Liabilities: Not Helpful in Determining Competitive Advantage
36.
Short-term debt: Avoid financial institutions with more long-term debt than short-term debt.
37.
Liquid Long-Term Debt: Jackpot or Flood?
38.
Total Current Liabilities and Current Ratio: Is a Ratio Below 1 Always a Bad Company?
39.
Non-current liabilities (long-term debt): Consider these when looking for long-term investments.
40.
Deferred income taxes, minority interests, and other liabilities: different types of liabilities
41.
Debt-to-Equity Ratio: Considering Treasury Stock
42.
Capital: The money that shareholders initially invested and still have left over
43.
Preferred stock, common stock, and capital surplus: Good companies rarely have preferred stock.
44.
Retained Earnings: The Secret to Buffett's Wealth
45.
Treasury Stock: A Necessary Condition for Blue Chip Stocks
46.
Return on Equity 1: Find a company that makes good use of shareholders' money.
47.
Return on Equity 2: Invest if it's high, don't invest if it's low.
48.
The Problems and Caveats of Leverage: A "Sick Chicken" Can Become a "Golden Goose"
Part 4 - Viewing the Cash Flow Statement Through Warren Buffett's Eyes
49.
Cash Flow Statement: A Very Useful Indicator for Identifying Good Companies
50.
Capital Expenditures: Why Buffett Doesn't Invest in Telephone Companies
51.
Buying Back Your Own Stock: Another Tax-Free Source of Income
Part 5 - How to Buy and Sell the Best Stocks at the Best Time
52.
Buffett's revolutionary stock investment idea
53.
Long-term competitive advantage consistently increases investment returns.
54.
Other ways to evaluate the best stocks
55.
The best time to buy fantastic stocks
56.
How to Find the Best Selling Timing
supplement
1.
Examples of financial statements for healthy and poor companies
2.
Key Accounting Terms
3.
Translator's note
4.
Company English name and index
Special Appendix - A customized video lecture CD (1 hour) that makes this book even easier to understand.
Into the book
This book explains the characteristics of 'companies with long-term competitive advantages', which Warren Buffett is interested in, from the perspective of financial statements.
In other words, companies that sell unique products, unique services, or low-cost companies have a long-term competitive advantage, and these companies can be discovered by carefully examining each account item in the three major financial statements: the balance sheet, income statement, and cash flow statement.
---p.5
Aren't we overlooking Korea's outstanding companies that foreigners have already discovered? This book will be of great help to investors who seek to identify companies that consistently deliver shareholder value and are trading at fair prices through financial statement analysis.
---p.7
Warren Buffett discovered that there was 'gold' hidden in financial statements.
By analyzing financial statements, we were able to distinguish which companies had long-term competitive advantages and which did not.
In this book, readers will discover what indicators Warren Buffett focuses on to identify companies with long-term competitive advantage.
This book introduces the core of Warren Buffett's financial statement analysis know-how, acquired through reading and analyzing the financial statements of numerous companies.
---p.9
Warren Buffett looks for 'sustainability' when looking at a company's financial statements.
Does the company's gross margin remain consistently high? Does the company maintain consistently low or zero debt? Does the company consistently spend only a small amount on research and development? Are the company's profits sustainable? And are they steadily growing? Warren Buffett examines these "sustainability" factors in financial statements to determine whether a company's competitive advantage is "long-term."
Warren Buffett analyzed financial statements precisely to determine whether a company had a 'long-term' competitive advantage.
---p.39
In his search for great companies with long-term competitive advantages, Warren Buffett discovered that examining individual items on a company's income statement revealed whether or not the company possessed a long-term competitive advantage that would generate significant wealth.
By analyzing the income statement, Warren Buffett was able to determine not only whether a company was making money, but also the nature of the company's profit margins, whether the company needed to invest heavily in research and development to maintain a competitive edge, and whether the company needed to borrow heavily to make money.
This was exactly the information he was looking for in the income statement to understand the company's economic viability.
For Warren Buffett, the source of profit is always more important than the profit itself.
---p.47
Even companies with high gross profit margins often lose their luster and long-term competitive advantage due to high R&D costs, selling, administrative, and interest expenses.
Any one of these three costs could destroy a company's sustainable economic viability.
These costs are operating expenses, and operating expenses are a headache for every business.
---p.55
Typically, companies with long-term competitive advantages in the consumer goods sector, a sector favored by Warren Buffett, have an interest expense-to-operating profit ratio of less than 15%.
However, it should be noted that the ratio of interest expenses to operating profit varies by industry.
This ratio is also a very useful indicator for determining the level of economic risk faced by the company.
---p.
71
There are exceptions, but Warren Buffett's simple rule of thumb is that if a company's net income to "all-time" sales ratio is greater than 20%, it likely has a long-term competitive advantage.
Likewise, if a company's net income to sales ratio is less than 10%, it's likely in a highly competitive business where no company can have a long-term competitive advantage.
---p.84
To find a manufacturing company with a long-term competitive advantage, you need to look for a company that is growing both its inventory and its net income.
A simultaneous increase in inventory and net income means that the company is running a profitable business, with profits increasing as sales increase.
When sales increase, these companies increase their inventory to meet demand in a timely manner.
Therefore, when inventory and net income increase together, it means that the company's sales are increasing, and that the increase in sales is leading to an increase in profits.
---p.
104
Warren Buffett believes that if a company's capital expenditures as a percentage of net income has averaged less than 50% annually over the past 10 years, it is likely to have a long-term competitive advantage, and if it has averaged less than 25%, the likelihood is even higher.
Finding companies with such long-term competitive advantages is the alpha and omega of investing.
In other words, companies that sell unique products, unique services, or low-cost companies have a long-term competitive advantage, and these companies can be discovered by carefully examining each account item in the three major financial statements: the balance sheet, income statement, and cash flow statement.
---p.5
Aren't we overlooking Korea's outstanding companies that foreigners have already discovered? This book will be of great help to investors who seek to identify companies that consistently deliver shareholder value and are trading at fair prices through financial statement analysis.
---p.7
Warren Buffett discovered that there was 'gold' hidden in financial statements.
By analyzing financial statements, we were able to distinguish which companies had long-term competitive advantages and which did not.
In this book, readers will discover what indicators Warren Buffett focuses on to identify companies with long-term competitive advantage.
This book introduces the core of Warren Buffett's financial statement analysis know-how, acquired through reading and analyzing the financial statements of numerous companies.
---p.9
Warren Buffett looks for 'sustainability' when looking at a company's financial statements.
Does the company's gross margin remain consistently high? Does the company maintain consistently low or zero debt? Does the company consistently spend only a small amount on research and development? Are the company's profits sustainable? And are they steadily growing? Warren Buffett examines these "sustainability" factors in financial statements to determine whether a company's competitive advantage is "long-term."
Warren Buffett analyzed financial statements precisely to determine whether a company had a 'long-term' competitive advantage.
---p.39
In his search for great companies with long-term competitive advantages, Warren Buffett discovered that examining individual items on a company's income statement revealed whether or not the company possessed a long-term competitive advantage that would generate significant wealth.
By analyzing the income statement, Warren Buffett was able to determine not only whether a company was making money, but also the nature of the company's profit margins, whether the company needed to invest heavily in research and development to maintain a competitive edge, and whether the company needed to borrow heavily to make money.
This was exactly the information he was looking for in the income statement to understand the company's economic viability.
For Warren Buffett, the source of profit is always more important than the profit itself.
---p.47
Even companies with high gross profit margins often lose their luster and long-term competitive advantage due to high R&D costs, selling, administrative, and interest expenses.
Any one of these three costs could destroy a company's sustainable economic viability.
These costs are operating expenses, and operating expenses are a headache for every business.
---p.55
Typically, companies with long-term competitive advantages in the consumer goods sector, a sector favored by Warren Buffett, have an interest expense-to-operating profit ratio of less than 15%.
However, it should be noted that the ratio of interest expenses to operating profit varies by industry.
This ratio is also a very useful indicator for determining the level of economic risk faced by the company.
---p.
71
There are exceptions, but Warren Buffett's simple rule of thumb is that if a company's net income to "all-time" sales ratio is greater than 20%, it likely has a long-term competitive advantage.
Likewise, if a company's net income to sales ratio is less than 10%, it's likely in a highly competitive business where no company can have a long-term competitive advantage.
---p.84
To find a manufacturing company with a long-term competitive advantage, you need to look for a company that is growing both its inventory and its net income.
A simultaneous increase in inventory and net income means that the company is running a profitable business, with profits increasing as sales increase.
When sales increase, these companies increase their inventory to meet demand in a timely manner.
Therefore, when inventory and net income increase together, it means that the company's sales are increasing, and that the increase in sales is leading to an increase in profits.
---p.
104
Warren Buffett believes that if a company's capital expenditures as a percentage of net income has averaged less than 50% annually over the past 10 years, it is likely to have a long-term competitive advantage, and if it has averaged less than 25%, the likelihood is even higher.
Finding companies with such long-term competitive advantages is the alpha and omega of investing.
---p.179
Publisher's Review
Features of this book
1.
The first and best book to focus on Warren Buffett's use of financial statements.
2.
New York Times, Amazon.com bestseller
3.
A book by the most knowledgeable author on Warren Buffett (Mary Buffett - Warren Buffett's former daughter-in-law)
4.
A masterpiece that surpasses Benjamin Graham's (Warren Buffett's mentor) "How to Read Financial Statements"
5.
Special Offer: A CD of a personalized lecture by Lee Min-joo, Director of the Warren Buffett Institute.
Look for stocks that will rise 10-fold in the financial statements!
- The first and best book on Warren Buffett's use of financial statements.
- Technology for utilizing financial statements that transcends time and space and can be applied anytime, anywhere.
- A basic financial statement book that even novice investors can easily understand.
- New York Times, Amazon.com bestseller
“Some people read Playboy, but I read financial statements.
“As an investor, you have to read the business reports and financial statements of countless companies.” (Warren Buffett)
It would be difficult to find a more concise expression of the importance of financial statements to stock investors.
Moreover, since this was said by Warren Buffett, the chairman of Berkshire Hathaway and known as an investment genius, it is pointless to discuss the authenticity of this statement.
In fact, if you read this book, you will see that Warren Buffett, as he says, invests in stocks based on financial statements.
Warren Buffett's Guide to Financial Statements Revealed for the First Time
This book focuses on Warren Buffett's stock investment know-how in selecting blue-chip stocks using financial statements.
There has been no book, domestic or international, that covers in detail how Warren Buffett uses financial statements when analyzing companies.
All that is known is that Warren Buffett places importance on financial statements because he invests from a business perspective.
The question of which items in financial statements Warren Buffett focuses on and what meaning he attaches to them when evaluating a company remains an unsolved mystery.
This book is considered the first and best book to completely answer these questions.
Above all, it stands out from other books in that it is written by an author who is most knowledgeable about Warren Buffett's investment methods.
Mary Buffett, the author of this book, is Warren Buffett's former daughter-in-law and has been a member of his family for 12 years, watching him closely.
The book's explosive popularity and bestseller status in the New York Times and Amazon.com, the world's largest bookstore, as soon as it was published is interpreted as a result of a combination of these factors.
The real jackpot stocks are hidden in the financial statements.
This book explains the characteristics of companies with long-term competitive advantages, or super-high-quality blockbuster stocks, that Warren Buffett is interested in, from the perspective of financial statements.
Companies that sell unique products, unique services, or low-cost businesses are companies that meet these conditions, and you can find these companies by carefully examining each account item in the three major financial statements: the balance sheet, income statement, and cash flow statement.
For example, Warren Buffett lists capital expenditures as one of the items that should never be overlooked in the cash flow statement, and specifically believes that companies with a capital expenditures-to-net income ratio of less than 50% are likely to have a long-term competitive advantage.
If this ratio is less than 25%, you've found a 10-bagger stock.
Warren Buffett doesn't invest in telephone companies because of their high capital expenditure ratio.
Warren Buffett also interpreted that if a company's net income to 'historical' sales ratio is over 20%, it is likely to have the conditions for a blockbuster stock.
Conversely, if a company's net income to sales ratio is less than 10%, it is likely that the business is so competitive that no company can have a long-term competitive advantage.
This book interprets each individual item in financial statements from the perspective of Warren Buffett, the world's greatest stock investor, and explains in an easy-to-understand manner how to utilize them in practice.
Why Warren Buffett Values Financial Statements
Warren Buffett learned value investing from his mentor, Benjamin Graham, known as the father of value investing, at Columbia University in the 1950s, and later joined Graham's Wall Street investment firm as an analyst just before Graham retired.
At Graham's investment firm, Warren Buffett worked with renowned value investor Walter Schloss.
Schloss helped Warren Buffett learn techniques for identifying undervalued companies by having him read the financial statements of thousands of companies.
In the mid-1960s, Warren Buffett began revisiting Benjamin Graham's investment strategies.
In the process, he discovered two surprising ways to figure out which companies are the best investments and which will consistently make the most money.
As soon as he discovered these two methods, Warren Buffett changed Graham's investment strategy that he had been using until then and created a new investment strategy that is considered one of the greatest investment strategies in existence.
This book examines Warren Buffett's unique approach to investing, demonstrating how his unique strategy applies to investing and how he uses financial statements to implement it.
The art of utilizing financial statements that transcends time and space
This book's true value lies in its ability to stop investors from using various excuses to avoid financial statements.
First of all, it is explained concisely and easily understandable.
It is accompanied by various examples and anecdotes so that it can be understood immediately while reading.
The most welcome fact is that Warren Buffett's method of using financial statements can be applied to different countries and accounting standards.
This is a must-read for investors who have never encountered financial statements or have struggled to apply them to their investments.
1.
The first and best book to focus on Warren Buffett's use of financial statements.
2.
New York Times, Amazon.com bestseller
3.
A book by the most knowledgeable author on Warren Buffett (Mary Buffett - Warren Buffett's former daughter-in-law)
4.
A masterpiece that surpasses Benjamin Graham's (Warren Buffett's mentor) "How to Read Financial Statements"
5.
Special Offer: A CD of a personalized lecture by Lee Min-joo, Director of the Warren Buffett Institute.
Look for stocks that will rise 10-fold in the financial statements!
- The first and best book on Warren Buffett's use of financial statements.
- Technology for utilizing financial statements that transcends time and space and can be applied anytime, anywhere.
- A basic financial statement book that even novice investors can easily understand.
- New York Times, Amazon.com bestseller
“Some people read Playboy, but I read financial statements.
“As an investor, you have to read the business reports and financial statements of countless companies.” (Warren Buffett)
It would be difficult to find a more concise expression of the importance of financial statements to stock investors.
Moreover, since this was said by Warren Buffett, the chairman of Berkshire Hathaway and known as an investment genius, it is pointless to discuss the authenticity of this statement.
In fact, if you read this book, you will see that Warren Buffett, as he says, invests in stocks based on financial statements.
Warren Buffett's Guide to Financial Statements Revealed for the First Time
This book focuses on Warren Buffett's stock investment know-how in selecting blue-chip stocks using financial statements.
There has been no book, domestic or international, that covers in detail how Warren Buffett uses financial statements when analyzing companies.
All that is known is that Warren Buffett places importance on financial statements because he invests from a business perspective.
The question of which items in financial statements Warren Buffett focuses on and what meaning he attaches to them when evaluating a company remains an unsolved mystery.
This book is considered the first and best book to completely answer these questions.
Above all, it stands out from other books in that it is written by an author who is most knowledgeable about Warren Buffett's investment methods.
Mary Buffett, the author of this book, is Warren Buffett's former daughter-in-law and has been a member of his family for 12 years, watching him closely.
The book's explosive popularity and bestseller status in the New York Times and Amazon.com, the world's largest bookstore, as soon as it was published is interpreted as a result of a combination of these factors.
The real jackpot stocks are hidden in the financial statements.
This book explains the characteristics of companies with long-term competitive advantages, or super-high-quality blockbuster stocks, that Warren Buffett is interested in, from the perspective of financial statements.
Companies that sell unique products, unique services, or low-cost businesses are companies that meet these conditions, and you can find these companies by carefully examining each account item in the three major financial statements: the balance sheet, income statement, and cash flow statement.
For example, Warren Buffett lists capital expenditures as one of the items that should never be overlooked in the cash flow statement, and specifically believes that companies with a capital expenditures-to-net income ratio of less than 50% are likely to have a long-term competitive advantage.
If this ratio is less than 25%, you've found a 10-bagger stock.
Warren Buffett doesn't invest in telephone companies because of their high capital expenditure ratio.
Warren Buffett also interpreted that if a company's net income to 'historical' sales ratio is over 20%, it is likely to have the conditions for a blockbuster stock.
Conversely, if a company's net income to sales ratio is less than 10%, it is likely that the business is so competitive that no company can have a long-term competitive advantage.
This book interprets each individual item in financial statements from the perspective of Warren Buffett, the world's greatest stock investor, and explains in an easy-to-understand manner how to utilize them in practice.
Why Warren Buffett Values Financial Statements
Warren Buffett learned value investing from his mentor, Benjamin Graham, known as the father of value investing, at Columbia University in the 1950s, and later joined Graham's Wall Street investment firm as an analyst just before Graham retired.
At Graham's investment firm, Warren Buffett worked with renowned value investor Walter Schloss.
Schloss helped Warren Buffett learn techniques for identifying undervalued companies by having him read the financial statements of thousands of companies.
In the mid-1960s, Warren Buffett began revisiting Benjamin Graham's investment strategies.
In the process, he discovered two surprising ways to figure out which companies are the best investments and which will consistently make the most money.
As soon as he discovered these two methods, Warren Buffett changed Graham's investment strategy that he had been using until then and created a new investment strategy that is considered one of the greatest investment strategies in existence.
This book examines Warren Buffett's unique approach to investing, demonstrating how his unique strategy applies to investing and how he uses financial statements to implement it.
The art of utilizing financial statements that transcends time and space
This book's true value lies in its ability to stop investors from using various excuses to avoid financial statements.
First of all, it is explained concisely and easily understandable.
It is accompanied by various examples and anecdotes so that it can be understood immediately while reading.
The most welcome fact is that Warren Buffett's method of using financial statements can be applied to different countries and accounting standards.
This is a must-read for investors who have never encountered financial statements or have struggled to apply them to their investments.
GOODS SPECIFICS
- Date of issue: January 30, 2010
- Page count, weight, size: 226 pages | 533g | 153*224*20mm
- ISBN13: 9788996032069
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