Warren Buffett and the Interpretation of Financial Statements

The Search for the Company with a Durable Competitive Advantage

Publisher: Simon and Schuster, 2008, 202 pages

ISBN: 978-1-84983-319-8

Last modified: July 28, 2021, 11:03 p.m.

Synopsis

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.

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.

Introduction
Chapter 1: Two Great Revelations That Made Warren the Richest Person in the World
Chapter 2: The Kind of Business That Will Make Warren Superrich
Chapter 3: Where Warren Starts His Search for the Exceptional Company
Chapter 4: Durability Is Warren's Ticket to Riches
Chapter 5: Financial Statement Overview: Where the Gold Is Hidden
Chapter 6: Where Warren Goes to Find Financial Information

The Income Statement

Chapter 7: Where Warren Starts: The Income Statement
Chapter 8: Revenue: Where the Money Comes In
Chapter 9: Cost of Goods Sold: For Warren the Lower the Better
Chapter 10: Gross Profit/Gross Profit Margin: Key Numbers for Warren in His Search for Long-Term Gold
Chapter 11: Operating Expenses: Where Warren Keeps a Careful Eye
Chapter 12: Selling, General, and Administrative Expenses
Chapter 13: Research and Development: Why Warren Stays Away from It
Chapter 14: Depreciation: A Cost Warren Can't Ignore
Chapter 15: Interest Expense: What Warren Doesn't Want
Chapter 16: Gain (or Loss) on Sale of Assets and Other
Chapter 17: Income Before Tax: The Number That Warren Uses
Chapter 18: Income Taxes Paid: How Warren Knows Who Is Telling the Truth
Chapter 19: Net Earnings: What Warren Is Looking For
Chapter 20: Per-Share Earnings: How Warren Tells a Winner from the Losers

Balance Sheet

Chapter 21: Balance Sheet in General
Chapter 22: Assets
Chapter 23: Current Asset Cycle: How the Money Is Made
Chapter 24: Cash and Cash Equivalents: Warren's Pile of Loot
Chapter 25: Inventory: What the Company Needs to Buy and What the Company Needs to Sell
Chapter 26: Net Receivables: Money Owned to the Company
Chapter 27: Prepaid Expenses/Other Current Assets
Chapter 28: Total Current Assets and the Current Ratio
Chapter 29: Property, Plant, and Equipment: For Warren Not Having Them Can Be a Good Thing
Chapter 30: Goodwill
Chapter 31: Intangible Assets: Measuring the Unmeasurable
Chapter 32: Long-Term Investments: One of the Secrets to Warren's Success
Chapter 33: Other Long-Term Assets
Chapter 34: Total Assets and the Return on Total Assets
Chapter 35: Current Liabilities
Chapter 36: Accounts Payable, Accrued Expenses, and Other Current Liabilities
Chapter 37: Short-Term Debt: How It Can Kill a Financial Institution
Chapter 38: Long-Term Debt Coming Due and the Troubles It Can Cause
Chapter 39: Total Current Liabilities and the Current Ratio
Chapter 40: Long-Term Debt: Something That Great Companies Don't Have a Lot Of
Chapter 41: Deffered Income Tax, Minority Interests, and Other Liabilities
Chapter 42: Total Liabilities and the Debt to Shareholders' Equity Ratio
Chapter 43: Shareholders' Equity/Book Value
Chapter 44: Preferred and Common Stock: Additional Paid in Capital
Chapter 45: Retained Earnings: Warren's Secret for Getting Superrich
Chapter 46: Treasure Stock: Warren Likes to See This on the Balance Sheet
Chapter 47: Return on Shareholders' Equity: Part One
Chapter 48: Return on Shareholders' Equity: Part Two
Chapter 49: The problem with Leverage and the Tricks It Can Play on You

The Cash Flow Statement

Chapter 50: The Cash Flow Statement: Where Warren Goes to Find the Cash
Chapter 51: Capital Expenditures: Not Having Them Is One of the Secrets to Getting Rich
Chapter 52: Stock Buybacks: Warren's Tax-Free Way to Increase Shareholder Wealth

Valuing the Company With A Durable Competitive AdvantageThe Income Statement

Chapter 53: Warren's Revolutionary Idea of the Equity Bond and How It Has Made Him Superrich
Chapter 54: The Ever-Increasing Yield Created by the Durable Competitive Advantage
Chapter 55: More Ways to Value a Company with a Durable Competitive Advantage
Chapter 56: How Warren Determines the Right Time to Buy a Fantastic Business
Chapter 57: How Warren Determines It Is Time to Sell
Appendix

Reviews