Why Warren Buffett Reads the Balance Sheet Before Anything Else (And How to Do It Yourself)
A plain English guide for business owners and investors
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“I spend more time looking at balance sheets than I do income statements”
— Warren Buffett
Out of the three financial statements, the balance sheet is more than likely to be the most confusing to you. After all — profit derives from revenue, and cash is — well, cash. But the balance sheet is the first financial statement that Warren Buffett picks up. Why?
Simply put, the balance sheet is harder to manipulate than the income statement. For business operators and self-taught investors, it’s not that you should understand it — you absolutely need to.
This is part two of the How to Understand Financial Statements series. Part one, is free and taught you How to Read an Income Statement. Today, you’ll be learning why the balance sheet always reveals the most about a company.
This article is from “The Nuts & Bolts” section where I provide business operators and investors the mechanisms and manuals to make better decisions. To continue viewing articles like this please consider upgrading to The School of Knowledge+.
