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Warren Buffett is one of the richest men in the world. One of the key components to his multi-billionaire success has been his ability buy companies with a sustainable competitive advantage. Think Coca-Cola, Moody’s or See’s Candy. For this video, we are going to see if we can mimic his success on how to make money, by learning how to identify companies with such a sustainable competitive advantage. More specifically, we are going to learn how to do this by analysing a stock market company’s financial statements – the income statement, the balance sheet and the cash flow statement. This is a top 5 takeaways video of “Warren Buffett and the interpretation of financial statements”, written by Mary Buffett and David Clark.
Playlist on how to master stock market accounting:
Top 5 takeaways from Warren Buffett and the Interpretation of Financial Statements:
01:25 1. Consistency is King
03:32 2. What Warren Buffett is Looking for in an Income Statement
05:40 3. What Warren Buffett is Looking for in a Balance Sheet
08:00 4. What Warren Buffett is Looking for in a Cashflow Statement
09:50 5. When to Sell
TL;DW:
– When you are looking for a business with a durable competitive advantage, the keyword is consistency
– In the income statement, look for consistently growing net earnings and profit margins that consistently beat the competitors
– When observing the balance sheet, remember that the superior business has a high return on capital, that it seldom requires a lot of debt, and that retained earnings typically shows a steady growth
– In the cash flow statement, you want to make sure that the business is producing money for its shareholders, by examining its capital expenditures
– Even a fantastic business should be sold if you need money elsewhere, its competitive advantage is at stake, or if the price tag is at a crazy level
My goal with this channel is to help you make more money and improve your personal finances. How to become a millionaire? There are many ways to get there – investing in the stock market, becoming a stock trader, doing real estate investing, or why not becoming an entrepreneur? But whether you are interested in how to invest in stocks or investing strategies for creating passive income with rental properties – I hope to be able to provide you with a solution (or at least an idea) here. Warren Buffett – the greatest investor of our time – says that you should fill your mind with competing ideas and then see what makes sense to you. This channel is about filling your mind with those ideas. And in the process – upgrading your money-making toolbox. .
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