Warren Buffett and the Interpretation of Financial Statements
Warren Buffett teaches how to identify great brands, that will outperform the market in the long run, by the financial statements.
Introduction
This is a small book that gives readers a very simplified view of how Warren Buffett may interpret income statements, balance sheets, and cash flow sheets.
Chapter 1: Two great revelations that made Warren the richest person in the world
In the mid-sixties Warren began to reexamine Benjamin Graham's investment strategies. In doing so he had two stunning revelations about what kinds of companies would make the best investments and the most money over the long run.
Chapter 2: The kind of business that will make Warren superrich
Warren Buffett, one of the world's richest man in the world, believes that one really should not make decisions in securities based on what other people think. Instead, do the homework on companies one feel like he\she can evaluate better than others.
Chapter 3: Where Warren starts his search for the exceptional company
Before we start looking for the company that will make us rich, which is a company with a durable competitive advantage, it helps if we know where to look. Warren has figured out that these super companies come in three basic business models: (1) They sell either a unique product or (2) a unique service, or (3) they are the low-cost buyer and seller of a product or service that the public consistently needs.
Chapter 4: Durability is Warren’s ticket to riches
Warren has learned that it is the "durability" of the competitive advantage that creates all the wealth. Coca-Cola has been selling the same product for the last 122 years, and chances are good that it will be selling the same product for the next 122 years.
Chapter 5: Financial Statement overview: Where the gold is hidden
Financial statements are where Warren mines for companies with the golden durable competitive advantage. It is the company's financial statements that tell him if he is looking at a mediocre business forever moored to poor results or a company that has a durable competitive advantage that is going to make him superrich.
Chapter 6: Where Warren goes to find financial information
In the modern age of the Internet there are dozens of places where one can easily find a company's financial statements. The easiest access is through either MSN.com or Yahoo's Finance web page. For the hard-core investor Bloomberg.com offers the same services and a lot more, for a fee.
Chapter 7 — Where Warren Starts: The income statement
In his search for the magic company with a durable competitive advantage, Warren always starts with the firm's income statement. Income statements tell the investor the results of the company's operations for a set period of time.