Product Description

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

Product Details

• Amazon Sales Rank: #5325 in Books
• Published on: 2008-10-14
• Format: Deckle Edge
• Original language: English
• Number of items: 1
• Binding: Hardcover
• 224 pages

Features

• ISBN13: 9781416573180
• Condition: NEW
• Notes: Brand New from Publisher. No Remainder Mark.
• Click here to view our Condition Guide and Shipping Prices

Review
"Just as top musicians memorize scales, and the best golfers perfect swings at the driving range, investors who want sustainable, good returns must master the critical basics that Mary Buffett and David Clark lay out for us in this clear explanation of Warren Buffett's methods. I don't think there has been a better time for investors to relearn the fundamentals. Follow these methods and you will see results!" - Timothy P. Vick, senior portfolio manager, The Sanibel Captiva Trust Company, and author of How to Pick Stocks Like Warren Buffett

Review
"Just as top musicians memorize scales, and the best golfers perfect swings at the driving range, investors who want sustainable, good returns must master the critical basics that Mary Buffett and David Clark lay out for us in this clear explanation of Warren Buffett's methods. I don't think there has been a better time for investors to relearn the fundamentals. Follow these methods and you will see results!" - Timothy P. Vick, senior portfolio manager, The Sanibel Captiva Trust Company, and author of How to Pick Stocks Like Warren Buffett

About the Author
Mary Buffett is an internationally bestselling author and a speaker on the investment methods of Warren Buffett. She gained her unique insight while married to Warren's son Peter for twelve years.

David Clark is an internationally recognized authority on the subject of Buffettology and the managing partner of a private investment group in Omaha, Nebraska.

Customer Reviews

Great for the beginning to intermediate investor!
If you have an underlined copy of Security Analysis (Ben Graham's 700 page treatise on value investing) sitting on your desk or you are a professional money manager you may or may not find this book interesting. But if you are a beginner to intermediate investor who is interested in getting a quick basic course in how to read financial statements from a Warren Buffett perspective it is the perfect book.

I'm a professional with $500 million under management and I got a couple of good ideas out of it. But at this stage of my career getting a couple of good ideas on how to make more money is just fine with me. It only takes a couple of great ideas to get rich and even fewer to stay rich. Their book the New Buffettology, which was published in 2002, is aimed more at the professional investor and many people in the investment business use it. But I would say this book is for that beginning to intermediate group that really are a little in the dark about what to look for in a company's financial statements. And it focuses on what to look for if you are like Buffett and looking for a company with a Durable Competitive Advantage. Also it is a quick and easy read - unlike Graham's Security Analysis which most people buy but never read - try reading 700 pages on how to read a financial statement and see how far you get before you nod off with boredom. Quick and easy can be a good thing for great many investors.

Am I glad I bought it? Yes. Would I recommend it to my friends that aren't professionals? Yes. Would I recommend it to professionals? Yes, but don't expect to get more than a few good ideas out of it.

Basic and redundant...not for business people
This book may be helpful for those seeking a general understanding of financial statements and what Mr. Buffett considers in his review, but be aware of several points:

1. The book is written in remedial business language that leaves out a lot of important details that an active investor should know. It is clearly not intended for anyone with a decent understanding of accounting or finance;

2. The book contains errors - in two separate tabular displays, the balance sheet presented is not even balanced;

3. I wish I had a count of the number of times they wrote "durable competitive advantage." I get it - a durable advantage is important; and

4. Entire paragraphs are repeated verbatim in some sections. The book is horribly redundant - the authors clearly ran out of things to say.

In my opinion, the authors rushed to release this book and profit from the market downturn. Anything with Warren Buffett's name on it is apparently a hot selling item currently, and while this book certainly has some useful bits of investing advice, I would be surprised if Mr. Buffett himself actually read or approved the content of the book. The vast majority of the book is very general, basic information, and the only reason the book is getting attention is because the authors are lucky enough to have worked with Warren Buffett and are able to use his name in their title.

Overall, if you know nothing about investing or financial statements, this is probably a good book for you; however, if you have a business background and are somewhat versed in accounting and finance, you will find this to basic and redundant. It is a quick read and a cheap price, so I am not entirely negative on it, but certainly wish I would have flipped through a hard copy before ordering on Amazon. Lesson learned. I would give it two stars, but knocked to one for the errors and redundancy.

Somewhat Useful
Mary Buffett trades on her former daughter-in-law status vs. Warren Buffett to write books about his methods and insights. Readers have to take her word for the accuracy and inclusiveness of her material - having read "Snowball" and other sources I suspect Mary's assertions are not as accurate or inclusive as one would wish, but they're better than nothing.

The book's primary assertion is that Buffett looks for a sustainable competitive via financial statement data; he is especially focused on finding those with a low-cost advantage.

Buffett purportedly begins by looking at a firms income statement, seeking high gross margins. Good examples include coca-Cola @ 60%, Moody's @ 73%, Burlington Northern @ 61%, and Wrigley's @ 51%; G.M. (21%), Goodyear (20%), and United Airlines (14%) provide unattractive examples. Sustained high gross margins (eg. ten years), not just one year, are required.

Buffett then moves to Selling, General and Administrative Expenses. Coke spends an average of 59% gross profit in this area, G.M. 28-83%, Ford 89-789%. As for R&D, Coke and Moody's have none, Depreciation - Coca-Cola 6% of gross, Wrigley's 7%, P&G 8%, vs. G.M. 22-57%. Interest Expense at P&G runs about 8% of operating income, 7% at Wrigley, vs. 49% at Goodyear. Wells Fargo pays out 30%, relatively high, but also the lowest of the top five banks (industry average = 70%).

Buffett is not interested in extraordinary income - eg. asset sales. Net Earnings/total revenues should be on an upward trend over the past ten years - Coke = 21%, Moody's 41%, SouthWest Airlines 7%, and G.M. 3%

Buffett prefers stock buybacks to dividend payouts due to the better tax treatment.

Finally, Buffett does not follow the crowd - buy in a bear market, sell in a bull (P/E/ ratio > 50).

The book goes on to examine cash flow and balance sheet issues, but there the treatment is less precise and useful.