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

3.85  ·  Rating Details ·  830 Ratings  ·  74 Reviews

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 mento
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ebook, 224 pages
Published October 14th 2008 by Scribner (first published 2008)
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Jing
Jan 28, 2012 Jing rated it liked it  ·  review of another edition
I am an accounting and finance professional with 10 years' experience in advising clients on cross-border merger & acquisition transactions, international tax structuring and business model optimizations. I read companies' financial statements regularly to gain understanding of a company's business operation, source of revenue, financing situation, cash flow, global effective tax rate, and etc. I wanted to read a book about interpretation of financial statements from investors' perspective, ...more
Erin
Nov 07, 2014 Erin rated it did not like it  ·  review of another edition
Shelves: 2014
This was one of the most redundant books that I've ever read. If I ever hear "durable competitive advantage" again or see the word "superrich", I will literally scream. She used the terms at least once a page. Near the end of the book, the author had the audacity to say "at the risk of being redundant" to express yet another oversimplified concept. This was unintentionally hysterical given that her redundancy was noticeable on page 5. Not only was this book redundant, it was poorly written. The ...more
Parag Jain
Mar 12, 2017 Parag Jain rated it really liked it  ·  review of another edition
Good for starters

Every financial statement heading has a precise meaning for Mr. Buffet. Overall analysis for beginner investors to make sense of the financial statements.
Jaroslav Tuček
Feb 24, 2016 Jaroslav Tuček rated it did not like it  ·  review of another edition
Simplistic to the point of being insulting (they even have a chapter devoted to "proving" that the lower price you pay, the higher your yield), redundant and annoying in the frequency of use of phrases "Warren says", "Warren does" and "Warren thinks" -- it reads like a true pamphlet from a sect of zealots.

Most of the book gives basic definitions of accounting terms with some discussion of what to look for while identifying competitive advantage. There isn't much advice on actual valuations and i
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Clare
Mary Buffett seems like a ghastly parasite - capitalising (and no doubt making lots of money) from her surname, obtained during a 12 year marriage to Warren Buffett's son. Why this should make her an expert on his investment process is not clear.

Despite these grave and continuous reservations on my part, and her persistent use of "Warren" this and "Warren" that, this book is fairly useful for individual investors who want a crash course in basic accounting.
Trần Lệ Mẫn
Mình đã từng học môn kế toán đại cương, kế toán tài chính … Những kiến thức còn đọng lại trong trí nhớ của mình đều là những con số vô vi, nhưng sau khi đọc xong quyển sách này, những con số ấy hiện lên trong tâm trí đầy sinh động và điều mang những ý nghĩa lớn lao, quyết định nên đầu tư hay không. Chính những con số "vô nghĩa" ấy là làm cho Warren luôn nằm trong top 3 những người giàu có nhất thế giới.

Thật sự, cuốn sách này đã xoá mù kiến thức đầu tư tài chính. Bạn chỉ nên đầu tư chứng khoán kh
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Jonathan Perez
Dec 02, 2015 Jonathan Perez rated it really liked it  ·  review of another edition
Mary Buffett was the daughter in law of Warren Buffett. The ex-wife of his son Peter. She was not a financial expert but a close observer of the family. Therefore I thought that she might have caught one thing or two that I haven’t already read in other books. I picked this one up, “the interpretation of financial statements” last year and found it ok for beginners. It sums up well the key focus on what makes a great business. And it gives useful examples on a few of the crown jewels in the Berk ...more
Roy
Apr 09, 2016 Roy rated it it was amazing  ·  review of another edition
Absolutely fantastic for a certain audience.

Keep in mind this is a condensed overview of Buffet's method on "the interpretation of financial statements".

Why this book is great:

It gives a crash-course in understanding financial statements and how they work together. It includes what Buffet looks for and what he ignores (from a financial statement perspective) when examining a company. If you ask yourself, "How does he consistently pick company after company that usually does great?" this book wil
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Pui San
This is a good reminder for those equipped with accounting knowledge, and a great stater kit for those with none.

Pro and seasoned investors may find this book elementary but this is definitely recommended to any newcomers who are in search of their first book on the subject of "accounting" or "investing". I find this is a good how-to book for people who are keen in breaking down the rocket science of reading a set financial statements and to ultimately learning how to distinguish a quality stock
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John Hibbs
May 07, 2011 John Hibbs rated it really liked it  ·  review of another edition
The Book accomplishes what it intends to be, a simple primer on how Warren Buffett invests, which means reading financial reports for critical details that tell you the financial health of the company and from that understanding, where it is going in the future.

The book features over 60 short chapters starting with Buffett's philosophy on investing for the long haul and then, in a very simple format, breaks down financial statements; income statements, balance sheets and cash flow statements. T
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Terry Koressel
May 30, 2011 Terry Koressel rated it really liked it  ·  review of another edition
Ok, the title makes the book sound like a guaranteed bore. With all honesty, the book deals entirely with interpreting financial statements with the aim of finding companies with a sustainable competitive advantage. Most great companies in this category exhibit certain financial characteristics and the authors explain Warren Buffet's positive signals that he identifies as he examines such potential companies. However, be prepared. It is a walk through each account on the balance sheet....through ...more
C.J.
Jul 25, 2011 C.J. rated it liked it  ·  review of another edition
A quick, easy read about the basic principles of investing in solid, well-run companies. The book, for the most part, hits on the key points and sometimes glosses over more important points, but it is a decent guide to investing.



I wish the authors had spent more time on determining the "correct" price to buy securities. They did touch on this point towards the end, but went from more basic discussion to very technical, with little explanation as to their figures. Quite honestly, I think this mi
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Ivo Fernandes
Feb 17, 2013 Ivo Fernandes rated it really liked it  ·  review of another edition
Shelves: finance
I was already interested in the stock market when I read this book, but was like a bibble. Warren Buffett teaches how to identify great brands, that will outperform the market in the long run, by the financial statements. He explains with real life examples what each field on the report means, how big net margins justify bigger price/earnings.

The main idea that I try to keep always, is to think how everything will evolve, not in the following quarter, but in 10, 20, 30 years, if possible forever
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Krishna Kumar
A dry, short book that explains which elements of financial statements does Warren Buffet pay attention to when he estimates the value of a company. In a typical company’s annual statements, there are many different figures. It is a mistake to focus on each of those figures because they can obscure the real truth of what is going on. This book provides insight into which numbers are more meaningful than others.

The book does more or less what it claims to do. The authors use a point-by-point anal
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Christine Florete
I took a business-related degree before heading into another field. I used to suck rock-bottom with number related subjects back then to include anything finance or accounting. As I picked up this book, it made me see those subjects in a far more simplified light that I highly recommend this as reading for non-accountants.

Accounting is the language of business and no business decision may be anchored on a more quantitative basis than understanding the scorecard. With this book, number crunching
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LDB
Apr 18, 2009 LDB rated it it was ok  ·  review of another edition
I got this book because I had realized in my MBA classes that I needed to get better at reading financial statements and figuring out the story behind the numbers. I can't say this book helped me with that. While it was interesting enough and is good for a beginner, if you have had any accounting classes it becomes a bit simplistic. The book was extremely repetitive - it definitely took the approach of trying to grill specific points into you - and simplistic to an almost offensive point. Did it ...more
Nola Redd
Feb 21, 2012 Nola Redd rated it really liked it  ·  review of another edition
Read this in the car on the way to Disneyworld. My only wish is that I had made my pen and paper more accessible so I could have taken notes.

I'd really give this closer to a 3.75 than a 4, only because of the chipper, cheerleader-like method of closing the chapters that gave me a headache. However, the information was very clearly explained, and there were several comparisons to stocks Buffett holds/has held. She broke the math down into understandable chunks and highlighted what makes a compan
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Effendy Yahaya
Feb 08, 2015 Effendy Yahaya rated it it was amazing  ·  review of another edition
Excellent book. Compact and full of direct detail from finance, account and economic impact that Mary & David elaborate in a very straightforward meaning. It touches on previous financial crisis in 2007, reasons on why the effect of increase in bond and stock prices. The economic value, share prices, the effective on how companies doing sales up to how board functioning, reasoanably. This book has brought the gist idea of what Warren Buffett focusing on, diligently and considerably. Will lik ...more
^
May 12, 2011 ^ rated it liked it  ·  review of another edition
Recommends it for: Teenagers
Sound, basic, reading for any investor; perhaps more so to members of investment clubs.

Personally, I found the style of writing annoyingly American in idiom; but then, this is an American text. Even the dimensions of the book are an American format! So that gripe of mine is difficult to justify.

The end message is very simple. Do not invest in what you do not know or do not understand. Simple, yes. But isn't it incredible how many people ignore that!
Tirath
Sep 24, 2014 Tirath rated it really liked it  ·  review of another edition
At first, it seemed like a stupid book.
But then, the objective of the book became clear. It is a simple breakdown of the essential elements of analysing a company.
It is a book for people who want to acquaint themselves with the basic tenets of a fundamental approach to investing.
The last part of the book was also quite different an approach towards choosing companies.

If you think you know all there is to know about valuations, this will give it a new spin.
Gordon
Apr 27, 2013 Gordon rated it it was amazing  ·  review of another edition
I guess some will say it is repetitive, but I think this gives you an understanding of what makes a "good" business and by good I mean large businesses that have been around for a while and should be around in five years time with some sort of advantage over the competition. I have no business experience whatsoever so this book gave me a starting point to cut out all the less successful companies and appreciate what makes a business what it is.
Raghav Kapoor
A good, easy book for a beginner in financial and business analysis. Gives an insight about each line item in Balance sheet and Income statement at length. The authors also use many examples from Warren Buffet's investment strategy, which are usually known to a larger section of the investing public.

On the whole, I recommend this book only for the novices who want to get a tight hold on their finance concepts.
Sam
Jul 22, 2011 Sam rated it liked it  ·  review of another edition
Warren Buffett's mentor, Benjamin Graham, was all about cheap -- buy a portion of a company at much less than it's worth. Buffett, on the other hand, has said that he would rather buy a great business at a fair price than a fair business at a great price. So what's a great business? One that's abnormally profitable, & likely to continue being so -- one that has a "durable competitive advantage," says Mary Buffett.
Elena Ose
Simply written, easy to understand, and well structured. One shouldn't be a professional accountant to understand this material, having a business degree eases ones way in the final chapters, but even an business enthusiast fresh high school graduate could understand the basic guidelines for the long term riches.
Vaishali
Jul 07, 2014 Vaishali rated it it was amazing  ·  review of another edition
Shelves: self-improvement
This is it, guys. This is the primer on stock selection, and all you really need to know. One of the most valuable books I've ever come across. Very smart, very succinct, and immediately applicable. Do everything she outlines (why would you not ??????) and wait patiently. Very helpful if you're a business-owner as well, since it inadvertently tells you what investors look for.
sid
Jun 06, 2014 sid rated it liked it  ·  review of another edition
Includes some interesting observations about Warren's investment strategies. It did renew my interest in perhaps doing some investing as a hobby. The descriptions of basic accounting terms would be good for the uninitiated, and the equations she describes are all easy to follow. (though not as easy while driving...)
Craig
Jul 04, 2014 Craig rated it it was ok  ·  review of another edition
As an introduction to balance sheets and profit/loss statements this book is quite effective. The links to Warren Buffet are very tenuous and painfully repetitious, suggesting the book was conceived only to extract value from a name. It's a shame, because if this book was marketed as a small beginners guide to financial statements, it would have achieved its goal admirably.
Nikolina Dancheva
Полезна книга, с добри съвети. Има теми, на които би било хубаво да се наблегне малко повече и да се навлезе в подробности.
Основен недостатък на българския превод е, че не е направена абсолютно никаква аналогия с използваната при нас структура на финансови отчети спрямо представената в книгата американска отчетност.
Salim
Sep 22, 2016 Salim rated it liked it  ·  review of another edition
Quite an elementary take on looking at financial statements, and quite an elementary way of writing in general.

Initially bought to gain an insight into WB's strategic thinking, however doesn't work so well receiving this from as a third person narrative.

Good recap of financial statements, and not too heavy a read however wouldn't refer to the book again.
Clement Ting
Feb 27, 2015 Clement Ting rated it really liked it  ·  review of another edition
Overly simplistic, but a good starting point for people that does not know what is a balance sheet, income statement and cashflow statements. The explanations are draggy and half the book are a huge waste of time. 1 chapter on average lasts about 2 to 3 pages, and all its chapters end with almost the same philosophy which can range between an annoying 2 to 3 paragraphs on average.
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