Warren Buffett and the Interpretation of Financial Statements: The Search for the Company with a Durable Competitive Advantage

Mary Buffett · David Clark

Oct 2008 · Sold by Simon and Schuster

About this ebook

With an insider's view of the mind of the master, Mary Buffett and David Clark have written a simple, easy-to-follow guide for reading financial statements from Warren Buffett's successful perspective.

Buffett and Clark clearly outline Warren Buffett's strategies in a way that will appeal to newcomers and seasoned Buffettologists alike. Inspired by the seminal work of Buffett's mentor, Benjamin Graham (The Interpretation of Financial Statements, 1937), this book presents Buffett's interpretation of financial statements with anecdotes and quotes from the master investor himself.

Potential investors will discover:

-Buffett's time-tested dos and don'ts for interpreting an income statement and balance sheet

-Why high research and development costs can kill a great business

-How much debt Buffett thinks a company can carry before it becomes too dangerous to touch

-The financial ratios and calculations that Buffett uses to identify the company with a durable competitive advantage—which he believes makes for the winning long-term investment

-How Buffett uses financial statements to value a company

-What kinds of companies Warren stays away from no matter how cheap their selling price

Once readers complete and master Buffett's simple financial calculations and methods for interpreting a company's financial statement, they'll be well on their way to identifying which companies are going to be tomorrow's winners—and which will be the losers they should avoid at all costs.

Destined to become a classic in the world of investment books, Warren Buffett and the Interpretation of Financial Statements is the perfect companion volume to The New Buffettology and The Tao of Warren Buffett.

Ratings and reviews

Not only was the book brief and concise, it’s also written in such a simple language that even an amateur can understand at the first glance. For the more advanced reader, or even the seasoned value investor, this book gives insight into Warren Buffett’s “secret holy grail” to successful investing. The basics of financial statements are briefly introduced, where the analysis of each of the three parts are structured neatly into small sections and chapters for the reader to understand more easily. Although it’s not rocket science, these nuts and bolts of financial analysis can prove to be quite challenging for a beginner in accounting. Where appropriate, the book also clearly distinguishes Buffett’s different views and arguments with traditional Graham-based value investors, which make this book an overall great book for both beginners and experts alike.

Pretty good book. Provides useful benchmarks (from Warren's perspective) to evaluate companys' competitive advantage

Simplest book to understand the financial statement. So Far the best book i have ever read to understand as simple as a addition and subtraction table. Even kindergarden will understand financial statement after reading this book.

About the author

Mary Buffett is the coauthor of Scribner’s bestselling Buffettology series, and a contributor to HuffPost and the online magazine Thrive Global. Mary’s online school—BuffettOnlineSchool.com—provides monthly investment insights and helps students learn to build successful stock portfolios.

For over twenty years, David Clark has been considered the world’s leading authority on the subject of Warren Buffett’s investment methods. His international bestselling investment books, The Tao of Charlie Munger and those coauthored with Mary Buffett—Buffettology, The Buffettology Workbook, The New Buffettology, The Tao of Warren Buffett, Warren Buffett and the Interpretation of Financial Statements, The Management Secrets of Warren Buffett, Warren Buffett and The Art of Stock Arbitrage, and The Warren Buffett Stock Portfolio—have been translated into more than twenty languages and are considered “investment classics” the world over.