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Warren Buffett And The Interpretation Of Financial Statements is a guide to reading the financial statements of a business entity, based on Warren Buffett’s philosophy. Summary Of The Book The book is mainly targeted at those with little or no experience in reading financial statements. It discusses each type of financial statement and also explains the component parts of the statement for the benefit of the inexperienced. The authors then move on to the different aspects of each statement that Warren Buffett goes into, the specific factors that he looks for in deciding whether the business is a good prospect for his investment. Warren Buffett And The Interpretation Of Financial Statements then explains how Buffett uses each of the three types of financial statements to find the information that he considers important. Warren Buffet bases his investment philosophy on the principles followed by his mentor Benjamin Graham. However, he adds his own philosophy of durable competitive business advantage while investing. Graham bought companies with undervalued shares and then sold them as soon as he could realize a good profit. Buffett looks for other qualities while making a decision and will hold on to the business for longer periods to realize higher profit margins. He also takes into account the type of business the company is involved in, unlike his mentor. The book first covers what Buffett looks for in the Income Statement. For instance, he looks for companies with higher Gross Profit Margins. Then, the book explains what factors Buffett considers important in the Balance Sheet. In the Cash Flow Statement, Buffett looks at the Capital Expenditure. If a company has a large Capital Expenditure outflow, he does not consider it a good prospect. Warren Buffett avoids companies that have a large Property, Plant and Equipment Account, and those that have high R&D expenditures. He believes that these factors indicate that these companies need to spend huge amounts each year to update themselves and stay competitive, and that these show a lack of a definite competitive advantage. Warren Buffett And The Interpretation Of Financial Statements also has a section explaining how to evaluate a company's durable competitive advantage using corporate interest rates. Though the book may seem targeted an novices, it also contains advice for the seasoned investor based on Warren Buffett’s investment principles. About The Authors Mary Buffett is an author, speaker and environmental activist. Other books by this author include Warren Buffett's Management Secrets, The New Buffettology: How Warren Buffett Got and Stayed Rich in Markets Like This and How You Can Too!, and The Tao of Warren Buffett. Mary Buffett has worked as a consultant and as a principal speaker for many reputed organizations across the world. She makes regular appearances in television as a financial expert. David Clark is an author and a financial expert. Some of his other books are The Warren Buffett Stock Portfolio and Warren Buffett and The Art of Stock Arbitrage: Proven Strategies for Arbitrage and Other Special Investment Situations. David Clark has degrees in finance and law. He is an expert on the investment methods of Warren Buffett and is the founding member of the original Buffettologist group. He has written extensively on the subject. He is now the Managing Director of a private investment firm.