Reading Financial Statements for Value Investing - Warren Buffett Accounting Book

By Stig Brodersen

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Readers` Reviews

★ ★ ★ ★ ★
cassady cooper
Clear and simple to understand.
★ ★ ★ ★ ★
cemre
YES, clear and cocise
★ ★ ★ ★ ☆
daniela
Great book for beginner
Lessons for Corporate America - The Essays of Warren Buffett :: Jack: Straight from the Gut :: Warren Buffett and the Business of Life - The Snowball :: Investment Strategies of the World's Greatest Investor :: Buffett: The Making of an American Capitalist
★ ★ ★ ★ ★
mehrdad kermani
Follow the four principles
Learn the 3 statements
Practice

Simple rules to value investing. I have read other books from Peter Lynch which complement this but this is a great starting point.
★ ★ ★ ★ ★
kimberlee holinka
After reading Warren Buffett's Three Favorite Books, I was excited to find installment two in the series. While the first book provides an outstanding foundation on the principles of value investing, this book takes the reader through Buffett’s methods for understanding key financial statements – balance sheets, cash flow statements and income statements. The book will appeal to the seasoned investor and neophyte alike because it is written in a clear, narrative format while also detailing which data and key ratios are important to the value investor.

The book balances the purely quantitative approach with the vitally important need for qualitative analysis. This book brings that elements of value investing together better than any other I’ve read.

Finally, the authors provide a straight forward discount cash flow calculation for approximating intrinsic value. Determining intrinsic value is essential for the value investor because a company can meet all the value investing criteria and still be a poor investment if it isn’t purchased at a good price. Certain key ratios can be used as indicators of a good bargain but approximating intrinsic value is the essential component in purchasing a good value that will provide the prudent investors with outstanding returns over the long run.
★ ★ ★ ☆ ☆
joshua pratt
Boring book. I mean, you may think you're interested - and after you're halfway through you may re-evaluate.
★ ★ ★ ★ ★
danielle hubbell
An essential book for every beginner in the financial world who is eager to invest in stocks. I was trying to answer questions like, What is the value of a business?, How is the price related to equity? and this book helped me to understand these concepts.
★ ★ ★ ★ ★
rushda khan
This is a treasure for anyone trying to learn the basic mechanics of value investing. The authors do a masterful job of making the complex simple.
They also have a great podcast and website that I thoroughly enjoy - bravo !
★ ★ ★ ★ ★
kalisa beagle torkamani
Understanding accounting is critical to being able to understand financial statements and annual reports. The book provides insight into the key indicators used by Value investors.
★ ★ ★ ★ ★
tredici
Loved it, read it twice, easy to understand.
★ ★ ★ ★ ★
mahmoud
Extremely helpful. Written clearly and easy to follow.
★ ★ ★ ★ ☆
scott longden
Great info.
★ ★ ★ ☆ ☆
jessica n
The ideas are a little bit superficial.
★ ★ ★ ☆ ☆
kirstie
I have just read this book briefly. It is promising. Probably four star, after I have read it completely. Shipped on time.
★ ★ ☆ ☆ ☆
james colton
So MANY grammatical errors. It distracts from the material.
★ ★ ★ ★ ★
diane mccarrick
I would give it a million stars. Only way it could get more if warren wrote it himself
★ ★ ★ ★ ☆
katie beitz
Very good review of basics. Great for beginners. The concepts are really simplified and made easy to understand. May be slow for more advanced investors
★ ★ ★ ★ ★
amanda kaplan
love you book Stig and Preston , you both did amazing work , it is easy to understand
★ ★ ★ ★ ★
abhishek dhandia
Excellent Book.
★ ★ ★ ★ ★
char decoste
Great book for the aspiring stock investment starter!
★ ★ ★ ★ ☆
alexander yartsev
If you are into longer term investment and value investing, this books is for you. This book does help you read statements.
★ ★ ★ ★ ★
rossvz
Sells quality books... Enjoy doing business...
★ ☆ ☆ ☆ ☆
hanisha vaswani
I've read a lot of books on Warren Buffett, value investing, and financial statement analysis. In my opinion, their first book Warren Buffett's 3 Favorite Books was by far their best book and much better than this book. The first half of the WB Accounting book covers what value investing is and how to react to the market, etc. This is already covered in their first book WB's 3 Favorite Books as well as countless other value investing books on the market. The second half of the book discusses financial statement analysis. I think there are better books on the market discussing this topic. Below are a couple that are great for financial statement analysis. I think the two books mentioned below go much more in depth on the integration of how the statements are linked together.

Also, I think their discussion on Discounted Cash Flow was a little too academic. For one thing, I doubt Warren Buffett uses that calculation as he even says that he doesn't use a calculator or a computer in his office. Unless of course he does it in his head which I doubt as the algebra is fairly involved.

Financial Statements: A Step-by-Step Guide to Understanding and Creating Financial Reports

How to Read a Financial Report: Wringing Vital Signs Out of the Numbers

I debated to give the book 3 stars but I think there are better books on the market. There are TONS of value investing books and financial statement analysis books on the market that do I think a much better job. I highly recommend though Preston's first book called WB's 3 Favorite Books.
★ ★ ★ ★ ★
haroon
Intrresting
★ ★ ★ ☆ ☆
michelangelo flores
Solid, consisted information.
★ ★ ★ ★ ★
tom whedbee
I am a big fan of Stig's and Preston's from The Investors Podcast (www.theinvestorspodcast.com). I found them both to be very knowledgeable and thorough in everything they've put out online, so I decided to check out their book (I had opted to go through this one instead of the Three Favorite Books book).

They had a nice introduction to value investing-- showcasing its tenets and terminology. I'm already pretty well-versed on the topic, but I could easily see that the book's tone and use of examples would really make this a friendly and inviting topic to learn about. I was not surprised to find out that Stig is a college professor, as he really breaks down the material in a manner that makes it easy to digest. Many books on this subject (the ones that weren't written by academics) aren't like this, and I thought this was a really good approach, even though it was just review for me.

The rest of the book really digs deeper into the accounting metrics that Buffett and other value investors put emphasis on. In this regard, I found some of the subjects reminiscent of Mary Buffett's Buffetology, but as I mentioned, with the gentle approach of a college professor. A previous review mentioned that they thought the section on DCF was too academic, but I found it very thorough and honestly, not too involved. And even if Buffett doesn't follow the analysis to the letter, the emphasis of the book is: "these are the metrics... here's how to calculate them... but the more important concept is to understand value investing and the spirit of these metrics and HOW they are calculated."

The book spends a lot of time on basic accounting, which some of the other value investing books only briefly mention (and assume you are already knowledgeable of-- even the beginner books-- which may be a false assumption). I think this is a true asset here and liability for other books in the field (sorry), as without a firm knowledge of basic accounting, using investment metrics will be meaningless. The book does an excellent job tying the various metrics into the various financial statements, and really teaches WHY certain metrics are used and what they represent in real-world terms.
★ ★ ★ ★ ★
brian stone
I got a lot out of this book. The author clearly walks through the valuation methods aligned with fundamental analysis. I think more could be elaborated on regarding the arrival of a discount rate to determine value, but overall a well worth reading book. I started by reading the Graham classic “Security Analysis” and while thorough for its time- now seems a little out of place given the amount of verbiage spent on some things arguably no longer current. I found this book, while not carrying the prestige of the Graham classic, a concise and well written adoption of Graham precepts, presented in a modern and relatable form.
★ ★ ★ ★ ★
cristy
The book is well written and easy to understand. The concepts are well laid out and explained in layman’s terms. I recommend the book to anyone who wants a good and basic understanding of a company’s financials.
★ ★ ★ ★ ★
vibha
After reading this book, and studying the concepts within, I definitely feel more confident and comfortable delving deeper into the world of investment education. The content of this book has equipped me to better focus in furthering my knowledge and understanding of the investment strategies that I am particularly interested in and that suit my personality.
I can't imagine that advanced and experienced investors will get too much out of it; but, to be fair, I don't think this book was aimed at that market. For new and relatively inexperienced investors, I believe this book to be goldmine!
★ ★ ★ ★ ★
ali bari
The Warren Buffett Accounting Book is a must read for anyone learning about the fundamentals of value investing. The authors deliver key knowledge in a way that is easy to understand for investors of all levels. Combining this book with the buffettsbooks.com website is a good starting point for novice investors. I would suggest that anyone who buys this book also apply the things they learn in the text to stocks of interest during current market conditions. This will provide a real eye opener in terms of identifying value in a given company. Happy investing!
★ ☆ ☆ ☆ ☆
sparkles10
Basic intro to WB's approach. I think his is the worst books about him and his investment approach and might be useful for those with little or no skills with finance.
★ ★ ★ ★ ★
dominic
A fairly easy and painless read given the subject matter. I good clear summary of accounting terminology and how to use it in value investing.
★ ★ ★ ★ ☆
kamran hamid
Great book ,it's a must have.
★ ★ ★ ★ ★
melissa parsons
This book and the tools/tutorials provided by the authors in the website http://www.buffettsbooks.com have proved to be great resource for me in my analysis of companies. The book distills the fundamentals of accounting in easy to understand format.

The use of examples and case studies in the book is helpful. The flow of the book is clear and well organized. The authors introduce the reader to the key concepts and principles of accounting and value investing before diving into the technical details of financial statements, hence the book will appeal to beginners and experienced investors. I would recommend browsing through the initial chapters even if you are familiar with the most of the concepts.

I am impressed with the DCF calculators on their website and appreciate the explanations and tutorials that help the users. I have used multiple DCF calculators online, by far Preston & Stig have the best available online. Unlike many DCF calculators, the tool doesn't spit out a value, rather walks you through a workflow, helping you understand the process. Some of the manual steps can be automated but i can live with it.
★ ★ ★ ★ ☆
alyssa gimpayan
I think this book is very good for the readers who have never had any clue about value investing and financial statements. This is not the advanced investment book for people who have done investments for a long period of time. It serves like a mentorship (1st person writing) to the beginners on value investing and understanding the important things in the financial statements which pertain to value investing.
For people who want to get an idea on value investing, this is a good book to start of.
★ ★ ★ ★ ★
sircaliban
Great Book for beginners, I enjoyed reading it, although I was confused in some chapters but overall now I have better understanding of the stocks and value investment.

Thank you
★ ★ ★ ★ ★
aaron goodall
it was a good book for basic investing ideas and general knowledge on broad subjects. chocolate vanilla strawberry, mango, mint
★ ★ ★ ★ ★
carolyn abram
This book is great!! The graphics really help convey the point and help the reader understand how to read financial statements in the simplest way possible. I also like how it explains what Buffett looks for in stock picks and gives the exact numbers he looks for in his particular picks. A must read for anyone that is into Value Investing!
★ ★ ★ ★ ★
ifeyinwa
This book made me understand the concepts very quickly. The articulation was simply outstanding.

I sincerely thank the authors

Narayana Reddy
★ ★ ★ ★ ☆
alessa biblioteca
Easy to follow step by step tutorial on value investing with plenty of Buffet references. This is for anyone interested in a long term view on investing.
★ ★ ★ ★ ★
becca clarkson
Any book teaching how buffet does it is a good investment. This one is simple and easy to understand for begginers.
★ ★ ★ ★ ★
amr ashraf
great.
★ ★ ★ ★ ★
sherelle
Great book for anyone who wants to get started on value investing. Highly recommended.
★ ★ ★ ★ ★
ashley roach
Nice book.
★ ★ ★ ★ ★
samantha chandler
Outstanding intro to the Buffett method
★ ★ ★ ★ ★
pauline
If you are just getting to know value investing, read this like a text book. I would also recommend watching all the lessons that cover a lot of what is in this book on YouTube by Preston. Amazing content!
★ ★ ★ ★ ★
allyson
Just awesome! Perfect for someone that has no background in Accounting! Just teaches you what is required to analyse financial statements and no extra garbage! highly recommended.
★ ★ ★ ★ ★
donnette
Good read I would recommend reading and reviewing items thanks I don't think 20 words are required to write a review
★ ★ ★ ★ ★
gemma
Everyone who buys stocks should own this important book.
★ ★ ★ ★ ★
jeff newelt
Amazing
★ ★ ★ ★ ★
sls schnur
this is a good book - very easy read and the process outlined is simple and understandable. Its a shame the calculators aren't made available for download.
★ ★ ★ ★ ★
elizabeth pinborough
I gave this book a five star rating due to it's excellent language - it's complex topics made simpler. I personally think this is one of the best books to buy if you want to want to learn more about investing.

It gives you great insight and easy to understand examples.
★ ★ ☆ ☆ ☆
ellenrubinrpr
The book is okay for a really entry level investor. It has good examples and decent concepts that are hard for newbies to understand.
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