Summary of Warren Buffett and the Interpretation of Financial Statements

Looking for the book?
We have the summary! Get the key insights in just 10 minutes.

Warren Buffett and the Interpretation of Financial Statements book summary
Start getting smarter:
or see our plans




  • Innovative
  • Applicable


Financial statements hold clues about the future performance of a company, and Warren Buffett’s quest to find such clues has put him among the ranks of the wealthiest people in the world, according to Buffett experts Mary Buffett (his former daughter-in-law) and David Clark. Seeing the interpretation of financial statements through Warren Buffett’s eyes is both instructive and insightful. He routinely calculates meaningful financial ratios from line items in financial statements to distinguish the most promising companies from the rest. Although financial novices may have the most to learn from this book, the authors include savvy bits of “Buffettology” for more seasoned investors’ benefit. getAbstract recommends this book to readers who want a basic introduction to financial statement analysis and, perhaps more importantly, who want to learn how “the Oracle of Omaha” picks his winning investments.

About the Authors

Mary Buffett and David Clark have written four other books on how Warren Buffett makes investment decisions. An author and speaker, she was Warren Buffett’s daughter-in-law from 1981 to 1993. Clark is the managing partner of a private investment group.



The Divergent Styles of Warren Buffett and His Mentor

In the 1950s, an economist and professional investor named Benjamin Graham served as a mentor to Warren Buffett, who went on to become one of the world’s wealthiest people. Graham pioneered the practice of value investing – that is, buying into companies with low stock prices. Buffett, Graham’s student at New York’s Columbia University, later worked as an analyst at Graham’s Wall Street investment firm.

When he started his own investment business, Buffett altered the Graham method of value investing in several ways. For one, Buffett ignores the Graham rule of selling stocks after they appreciate by 50%, because sometimes their prices will rise much more. Graham would buy a stock based primarily on its cost – the lower, the better. Buffett favors high-quality companies with predictable cash flows, so he is inclined to pay a “fair price” for their shares, not necessarily the lowest amount possible. Graham espoused the importance of holding a diversified portfolio of stocks, increasing the odds that moneymaking stocks would offset losers. Buffett prefers a portfolio concentrated on a few stocks that he regards as excellent...

More on this topic

Customers who read this summary also read

A Man for All Markets
The Index Card
Capitalism’s Toxic Assumptions
Too Smart for Our Own Good
Financial Freedom

Related Channels

Comment on this summary

  • Avatar
  • Avatar
    L. W. 6 years ago
    Good summary. Reveals the importance of financial literacy.
  • Avatar
    D. T. 9 years ago
    The book will surely promote much-needed investor education on fundamental financial analysis - the key to success in stock investing.