Buffett estimated its net working capital—cash, accounts receivable, and inventory minus all liabilities—at around $35 per share. He guessed the tangible book value—the amount of physical assets owned by the company free of any liabilities—to be much higher, between $50 and $75 per share. He could buy the stock for $16 per share. The business would never be very profitable. But it could be a profitable investment if he could pare down its bloated inventory.
