The popular wholesale Interpretation of Financial Statements online sale

The popular wholesale Interpretation of Financial Statements online sale

The popular wholesale Interpretation of Financial Statements online sale
The popular wholesale Interpretation of Financial Statements online sale__after
The popular wholesale Interpretation of Financial Statements online sale__below
The popular wholesale Interpretation of Financial Statements online sale__right

Description

Product Description

"All investors, from beginners to old hands, should gain from the use of this guide, as I have."
From the Introduction by Michael F. Price, president, Franklin Mutual Advisors, Inc.

Benjamin Graham has been called the most important investment thinker of the twentieth century. As a master investor, pioneering stock analyst, and mentor to investment superstars, he has no peer.

The volume you hold in your hands is Graham''s timeless guide to interpreting and understanding financial statements. It has long been out of print, but now joins Graham''s other masterpieces, The Intelligent Investor and Security Analysis, as the three priceless keys to understanding Graham and value investing.

The advice he offers in this book is as useful and prescient today as it was sixty years ago. As he writes in the preface, "if you have precise information as to a company''s present financial position and its past earnings record, you are better equipped to gauge its future possibilities. And this is the essential function and value of security analysis."

Written just three years after his landmark Security Analysis, The Interpretation of Financial Statements gets to the heart of the master''s ideas on value investing in astonishingly few pages. Readers will learn to analyze a company''s balance sheets and income statements and arrive at a true understanding of its financial position and earnings record. Graham provides simple tests any reader can apply to determine the financial health and well-being of any company.

This volume is an exact text replica of the first edition of The Interpretation of Financial Statements, published by Harper & Brothers in 1937. Graham''s original language has been restored, and readers can be assured that every idea and technique presented here appears exactly as Graham intended.

Highly practical and accessible, it is an essential guide for all business people--and makes the perfect companion volume to Graham''s investment masterpiece The Intelligent Investor.

Review

"This reissue of the classic 1937 edition ... is right on time.... [The] basic study of financial statements by the average investor is more important than ever.-From the Introduction by Michael F. Price, president, Franklin Mutual Advisors, Inc."Graham''s ideas ... formed the framework of thinking about the stock market that has inspired the investment community for nearly a century."-Smart Money"Graham ranks as this century''s (and perhaps history''s) most important thinker on applied portfolio investment."-John Train, author of The Money Masters

From the Back Cover

The volume is Benjamin Graham''s timeless guide to interpreting and understanding financial statements. It has long been out of print, but now joins Graham''s other masterpieces, The Intelligent Investor and Security Analysis, as the three keys to understanding Graham and value investing. Readers will learn to analyze a company''s balance sheets and income statements and arrive at a true understanding of its financial position and earnings record. Graham provides simple tests any reader can apply to determine the financial health and well-being of any company. This volume is an exact text replica of the first edition of The Interpretation of Financial Statements, published by Harper & Brothers in 1937. Graham''s original language has been restored, and readers can be assured that every idea and technique presented here appears exactly as Graham intended.

About the Author

Benjamin Graham (1894-1976), the father of value investing, has been an inspiration for many of today''s most successful businesspeople. He is also the author of Securities Analysis and The Interpretation of Financial Statements.

Spencer B. Meredith was an instructor in security analysis at the New York Stock Exchange Institute.

Excerpt. © Reprinted by permission. All rights reserved.

Introduction

In the spring of 1975, shortly after I began my career at Mutual Shares Fund, Max Heine asked me to look at a small brewery-the F&M Schaefer Brewing Company. I''ll never forget looking at the balance sheet and seeing a +/- $40 million net worth and $40 minion in "intangibles". I said to Max, "It looks cheap. It''s trading for well below its net worth.... A classic value stock!" Max said, "Look closer."

I looked in the notes and at the financial statements, but they didn''t reveal where the intangibles figure came from. I called Schaefer''s treasurer and said, "I''m looking at your balance sheet. Tell me, what does the $40 million of intangibles relate to?" He replied, "Don''t you know our jingle, ''Schaefer is the one beer to have when you''re having more than one.''?"

That was my first analysis of an intangible asset which, of course, was way overstated, increased book value, and showed higher earnings than were warranted in 1975. All this to keep Schaefer''s stock price higher than it otherwise should have been. We didn''t buy it,

How many of today''s jingles are carried on balance sheets? Billions? Or have things changed? Do companies like Coca-Cola, Philip Morris, and Gillette have huge "intangible" assets that they now leverage worldwide and don''t even carry on their balance sheets?

This reissue of the classic 1937 edition of Ben Graham and Spencer Meredith''s The Interpretation of Financial Statements is right on time. Since our accounting conventions have been and continur- to be both inadequate and constantly changing to keep up with the evolution of businesses, the basic study of financial statements by the average investor (businesspeople and school teachers, for example), is more important than ever.

In 1998 , we are twenty years into a huge merger wave where most well-known large companies have acquired one or more other businesses. These companies'' financial statements have become, as a result, harder and harder to true up. Currently the Financial Accounting Standards Board is studying whether to eliminate the pooling of interest method of accounting for acquisitions; this change would increase the amount of goodwill put on balance sheets. Pooling allows a company to combine its accounts with those of a merged or acquired company without listing goodwill. Pooling also restricts stock buybacks, while the purchase method of accounting (the other method of accounting in a merger or acquisition) allows stock buybacks and requires that any goodwill be amortized over a period not to exceed forty years. The request to record goodwill could result in lower acquisition premiums and corporate valuation levels.

Wells Fargo and First Interstate, two banks that merged in 1996, used purchase accounting while the recent Chase Manhattan Bank and Chemical Bank merger used the pooling method. In examining the results going forward from those mergers and others like them that the accounting methods need to be interpreted consistently. For example, Wells Fargo is using cash flow to buy back stock even after almost $300 million per year in goodwill amortization and now reports "cash earnings", as well as regular earnings, after amortization earnings per share. We at Mutual Shares look harder at "cash earnings" than earnings after amortization of goodwill in those industries where we see many deals and much goodwill created. The accurate interpretation on the part of investors of these accounting issues and corporate behavior changes is key in today''s fastpaced market. Ben Graham''s principle of always returning to the financial statements will keep an investor from making huge mistakes, and without huge mistakes the power of compounding can take over.

Whether you are a disciple of Ben Graham, a value investor, or a growth or momentum investor, you can agree that a stock''s price must relate to its financials. From time to time investors ignore basic numbers like book value, cash flow, interest, and various ratios that fundamentally value common stock. It is especially common during periods of exuberance or fear that investors depart from the fundamental methods of successful investing. A sound understanding of how to read the basic financials should keep investors focused and thereby avoid costly mistakes, and also helps to uncover the hidden values of Wall Street.

Contemporary businesses are vastly more global than ever. Many of their globally distributed products are the result of decades of research and millions of dollars in promotions, yet they don''t mention any intangibles on the balance sheet, because they''re reflected in the market price. But how much will the market pay for a brand name, and why? Does the amount relate to the cash flows these well-known products produce? Global comparties have gotten pretty good at leveraging their brands. Airlines are using computers for optimum load factors. Management information systems are helping to produce greater returns from assets than ever before. As companies globalize both directly, and through joint ventures, the true values of the name brands will take shape. Investors using financial statements can then determine how much the market is assigning to their "product" and "brand name" intangibles.

The Interpretation of Financial Statements was first published in 1937, shortly after the Ben Graham bible, Security Analysis, and during an era when investors left the stock market in droves. Today, when the contrary is the case, investors should confirm their understanding of the financial statements of the companies whose stock they own. This manual takes you through both the balance sheet (what a company owns and owes) and the income statement (what it earns). Helpful discussions of other statements, ratios, and a glossary of frequently used terms are also included.

Earnings reports, annual reports, and news releases concerning charges, reserves, and restatement of earnings, to name just a few subjects, will all become clearer with this book in hand. All investors, from beginners to old...

Product information

Brief content visible, double tap to read full content.
Full content visible, double tap to read brief content.

Videos

Help others learn more about this product by uploading a video!
Upload video
Brief content visible, double tap to read full content.
Full content visible, double tap to read brief content.

More items to explore

Customer reviews

4.6 out of 54.6 out of 5
394 global ratings

Reviews with images

Top reviews from the United States

Andrew Everett
4.0 out of 5 starsVerified Purchase
Focus on the fundamentals—how much you are paying for steak and how much for the sizzle
Reviewed in the United States on April 9, 2016
Benjamin Graham (1894-1976) was a pioneer in the field of value investing. He is most famous for being Warren Buffet’s teacher at Columbia Business School. The Interpretation of Financial Statements was originally published in 1937. This 122-page book focuses on the balance... See more
Benjamin Graham (1894-1976) was a pioneer in the field of value investing. He is most famous for being Warren Buffet’s teacher at Columbia Business School. The Interpretation of Financial Statements was originally published in 1937. This 122-page book focuses on the balance sheet and income statement. Graham also wrote Security Analysis, first published in 1934, and The Intelligent Investor, first published in 1949.

There are a number of intangible assets on the balance sheet. In the introduction, Michael Price describes an experience early in his career. F&M Schaefer Brewing Company appeared to be trading well below intrinsic value. “I’ll never forget looking at the balance sheet and seeing a +/- $40 million net worth and $40 million in intangibles… I looked in the notes and at the financial statements, but they didn’t reveal where the intangibles figure came from. I called Schaefer’s treasurer [and asked]… He replied, ‘Don’t you know our jingle, Schaefer is the one beer to have when you’re having more than one?’ That was my first analysis of an intangible asset which, of course, was way overstated.”

Graham writes about the smoke and mirrors of goodwill. “Many companies which started with a substantial good-will item have written this down to $1 by making corresponding reductions in their surplus or even their capital accounts. This writing down of good-will does not mean that it is actually worth less than before, but only that the management has decided to be more conservative in its accounting policy. This point illustrates one of the many contradictions in corporate accounting. In most cases the writing off of good-will takes place after the company’s position has improved. But this means that the good-will is in fact considerably more valuable than it was at the beginning.”

“Patents constitute a somewhat more definite form of asset than good-will. But it is extremely difficult to decide what is the true or fair value of a patent at any given time… The value which the patents are carried on the balance sheet seldom offers any useful clue to their true worth.”

“In general, it may be said that little if any weight should be given to the figures in which intangible assets appear on the balance sheet. Such intangibles may have a very large value indeed, but it is the income account and not the balance sheet that offers the clue to this value. In other words, it is the earning power of these intangibles, rather than the balance sheet valuation, that really counts.”

It can be insightful to compare figures over several time periods to determine if performance is improving or deteriorating.
• “In the working capital is found the measure of the company’s ability to carry on its normal business comfortably and without financial stringency, to expand its operations without the need of new financing, and to meet emergencies and losses without disaster… The growth or decline of the working capital position over a period of years is also worthy of the investor’s attention.”
• “Receivables should be studied in relation to the annual sales… and in relation to changes shown over a period of years. If the receivables seem unusually large in proportion to sales, or to other items, there is some indication that an unduly liberal credit policy has been pursued, and that more or less serious losses are likely to be sustained from bad accounts.”
• “The most important individual item among the current liabilities is that of Notes Payable. This generally represents bank loans… If the notes payable are substantially exceeded by the cash holdings they can ordinarily be dismissed as relatively unimportant. But if borrowings are larger than the cash and receivables combined, it is clear that the company is relying heavily on the banks… Such a situation may justify misgivings. In such a case the bank loans should be studied over a period of years to see whether they have been growing faster than sales and profits. If they have, it is a definite sign of weakness.”

“An abnormally large inventory suggests that a good part of the merchandise may be unsalable and that its price may have to be drastically reduced in order to move it… The chief criterion is the ‘turnover’—defined as the annual sales divided by the inventory… Inventory turnover is important because the more times a year a company can turn its inventory, the less capital is invested in inventory, and there is less chance of loss through obsolete material.”

“The book value of a security is in most cases a rather artificial value… Outside of the field of banks, insurance companies, and, particularly, investment trusts, it is only in the exceptional case that book value or liquidating value plays an important role in security analysis. In the great majority of instances the attractiveness or the success of an investment will be found to depend on the earning power behind it.”

In a chapter on public utilities, Graham explains, “subsidiary preferred dividends are the dividends paid on preferred stock outstanding in the hands of the public—i.e., not held by the parent company… In dealing with the bonds of public utility and other holding companies, it is usually necessary to consider the subsidiaries’ preferred dividends as fixed charges, for these may have to be paid before there is any income available for the parent company’s bonds.”

Approximately one-quarter of the book is a glossary of financial terms. Here are some examples:

“Earning Power. Properly, a rate of earnings which is considered as ‘normal,’ or reasonably probable, for the company or particular security. It should be based both upon the past record, and upon a reasonable assurance that the future will not be vastly different from the past. Hence companies with highly variable records or especially uncertain futures may not logically be thought of as having a well-defined earning power.”

“Expenditures vs. Expenses. Expenditures are outlays of cash or the equivalent; frequently they involve no concurrent charge against operations or earnings (e.g. Capital Expenditures). Expenses are costs, i.e. charges against current operations or earnings; frequently they involve no concurrent cash expenditure (e.g. Accruals, Depreciation).”

“Going Concern Value… The special profit-making character that attaches to a well-established and successful business.”

“Good-Will. Intangible Asset purporting to reflect the capitalization of excess future profits expected to accrue as a result of some special intangible advantage held, such as good name, reputation, strategic location, or special connections. In practice, the amount at which good-will is carried on the balance sheet is rarely an accurate measure of its true value.”

“Intrinsic Value. The ‘real value’ behind a security issue, as contrasted with its market price. Generally a rather indefinite concept; but sometimes the balance sheet and earnings record supply dependable evidence that the intrinsic value is substantially higher or lower than the market price.”

“Joint and Several Guarantee. A guarantee by more than one party under which each party is potentially liable for the full amount involved if his associates do not meet their share of the obligation.”

“Junior Issue. An issue whose claim for interest or dividends, or for principal value, comes after some other issue, called a senior issue. Second mortgages are junior to first mortgages on the same property; common stock is junior to preferred stock, etc.”

“Leasehold. The right to occupy a property at a specified rental for a specified period of years. To obtain a long term lease at a favorable rental a cash bonus is frequently paid by the lessee to the lessor (owner), if it is a new lease, or to the former lessee, if the lease is taken over. The balance sheet item ‘Leaseholds’ should represent only this cash consideration, and should be amortized over the life of the lease.”

“Leasehold improvements. The cost of improvements or betterments to property leased for a period of years. Such improvements ordinarily become the property of the lessor (owner) on expiration of the lease; consequently their cost must be amortized over the life of the lease.”

“Protective Covenants. Provisions in a bond indenture, or charter provisions affecting a preferred stock, (a) which bind the company not to do certain things considered injurious to the issue or, (b) which set forth remedies in the event of unfavorable developments. Example of (a): Agreement not to place a lien on the property ahead of the bond issue. Example of (b): The passing of voting power to the preferred stock if dividends are not paid.”

“Secular Trend. A long term movement—e.g. of prices, production, etc.—in some definite direction. Opposed to seasonal fluctuations or variations.”

“Sinking Fund. An arrangement under which a portion of a bond or preferred stock issue is retired periodically in advance of its fixed maturity...”

Michael Price writes, “a stock price must relate to its financials… It is especially common during periods of exuberance or fear that investors depart from the fundamental methods of successful investing… Focus on the fundamentals—how much you are paying for steak and how much for the sizzle—and you shouldn’t go wrong.”

Graham concludes, “the investor who buys securities when the market price looks cheap on the basis of the company’s statements, and sells them when they look high on this same basis, probably will not make spectacular profits. But on the other hand, he will probably avoid equally spectacular and more frequent losses. He should have a better than average chance of obtaining satisfactory results. And this is the chief objective of intelligent investing.”
32 people found this helpful
Helpful
Report
thomas d. mason
5.0 out of 5 starsVerified Purchase
Benjamin Graham: Interpretation of Financial Statements
Reviewed in the United States on July 25, 2019
Excellent book received very quickly from the seller. Reprint of classic 1937 edition. The financial ratios used in this book are just as relevant 82 years later. This book is the cornerstone of financial analysis.
7 people found this helpful
Helpful
Report
Warren Trotter
5.0 out of 5 starsVerified Purchase
Textbook or Historical Document?
Reviewed in the United States on November 7, 2019
The "old style" format of this book is very refreshing. Short chapters (1 to 3 pages) addressing a single concept. You don''t have to decide what is "fill" to find what the author is saying. Certainly some of the material does not address modern day conditions, but this... See more
The "old style" format of this book is very refreshing. Short chapters (1 to 3 pages) addressing a single concept. You don''t have to decide what is "fill" to find what the author is saying. Certainly some of the material does not address modern day conditions, but this book can provide a solid background, or a refresher, on financial statements from the investor''s point of view.
3 people found this helpful
Helpful
Report
Daniel Lee
5.0 out of 5 starsVerified Purchase
Timeless classic on financial statements.
Reviewed in the United States on December 30, 2020
I read this book because it was recommended by Warren Buffett it was a great student of Benjamin Graham. I thought the book was well written and there’s a timeless classic that provides financial guidance that holds true many years after it was written. The... See more
I read this book because it was recommended by Warren Buffett it was a great student of Benjamin Graham. I thought the book was well written and there’s a timeless classic that provides financial guidance that holds true many years after it was written.

The author provides a good overview of income statements and balance sheets and important areas to focus on when reviewing company financials.
One person found this helpful
Helpful
Report
Garron Deveaux
5.0 out of 5 starsVerified Purchase
Helpful for beginners.
Reviewed in the United States on July 14, 2019
Nice, simple explanations of key terms and concepts related to Income statements and Balance Sheets. A nice reference to have during your studies. Only complaint is that the book is from an era when Cash Flow Statements weren''t standard.
3 people found this helpful
Helpful
Report
Brian Hawkinson
4.0 out of 5 starsVerified Purchase
Balance sheet analysis from a master at his trade
Reviewed in the United States on December 18, 2005
For the most part I found Graham''s book to be very useful. It is a quick and informative read with some insights on how to make heads or tails of what you are looking at with an annual or quarterly report. Although there was some disappointment with the Income Statement... See more
For the most part I found Graham''s book to be very useful. It is a quick and informative read with some insights on how to make heads or tails of what you are looking at with an annual or quarterly report. Although there was some disappointment with the Income Statement explanation (which, honestly isn''t terribly hard to understand), as well as his focus on railroad and utility companies (with some focus on bonds and preferred stocks, which I have no interest in), I found this to be very helpful.

On a whole, this book is excellent for the beginning investor. It is a little out of date, but the core information, as well as reading the words of Graham himself, is worth the read. Graham also applies everything he wrote about to a financial statement, showing exactly what to do, which is an invaluable piece of instruction. Definitely recommend, even if it is for the sample balance sheet analysis alone.
23 people found this helpful
Helpful
Report
tommy lewis
4.0 out of 5 starsVerified Purchase
Not an in depth guide
Reviewed in the United States on September 11, 2021
This is a very basic accounting 101 walk through of how to read financial statements(balance sheet, income statement). I was really hoping for an interpretation of financial statements. Maybe how to look for red flags, strengths, weaknesses, etc in the numbers.
Helpful
Report
Roman Osborn
1.0 out of 5 starsVerified Purchase
Not worth it
Reviewed in the United States on January 14, 2021
Do not buy this if your looking for an explanation on how to tell if a company will be ok or not- just a nice cover nothing more
Helpful
Report

Top reviews from other countries

Amazon Customer
5.0 out of 5 starsVerified Purchase
A Classic Reference Book
Reviewed in the United Kingdom on April 25, 2016
People involved in the governance of voluntary and charitable organisations often come into the role from other than financial management disciplines. This classic reference book helps with understanding financial statements in an increasingly regulated environment...See more
People involved in the governance of voluntary and charitable organisations often come into the role from other than financial management disciplines. This classic reference book helps with understanding financial statements in an increasingly regulated environment demanding clear understanding and accountability.
People involved in the governance of voluntary and charitable organisations often come into the role from other than financial management disciplines. This classic reference book helps with understanding financial statements in an increasingly regulated environment demanding clear understanding and accountability.
One person found this helpful
Report
Amazon Customer
3.0 out of 5 starsVerified Purchase
Three Stars
Reviewed in the United Kingdom on November 16, 2017
is okay
is okay
Report
Amandeep S.
2.0 out of 5 starsVerified Purchase
Dirty book with glue and pen marks around the cover
Reviewed in India on March 1, 2019
old stock of the book was sent with glue marks and dust and pen marks behind the cover. Disappointed with the seller. Otherwise the book is a good read.
old stock of the book was sent with glue marks and dust and pen marks behind the cover. Disappointed with the seller. Otherwise the book is a good read.
6 people found this helpful
Report
Translate all reviews to English
Paar
4.0 out of 5 starsVerified Purchase
Buch für Beginner
Reviewed in Germany on June 14, 2020
Geht sehr gut auf die Basics ein und erklärt es verständlich. Es sind etwa 122 Seiten und in einem kleinem Buch, weshalb man es in wenigen Tagen durchlesen kann. Empfehlung nur für wirkliche Einsteiger!
Geht sehr gut auf die Basics ein und erklärt es verständlich.
Es sind etwa 122 Seiten und in einem kleinem Buch, weshalb man es in wenigen Tagen durchlesen kann.
Empfehlung nur für wirkliche Einsteiger!
One person found this helpful
Report
Translate review to English
Unknown
5.0 out of 5 starsVerified Purchase
Finest book
Reviewed in India on January 13, 2020
I am happy with this book. Becoz this book is one of the best book in my life. Thank so much 😘😊😘😘❤️
I am happy with this book. Becoz this book is one of the best book in my life. Thank so much 😘😊😘😘❤️
3 people found this helpful
Report
See all reviews
Brief content visible, double tap to read full content.
Full content visible, double tap to read brief content.

Customers who bought this item also bought

Brief content visible, double tap to read full content.
Full content visible, double tap to read brief content.

Customers who viewed this item also viewed

Brief content visible, double tap to read full content.
Full content visible, double tap to read brief content.

Pages with related products.

  • financial economics
  • financial statement analysis
  • financial statements
  • public accounting
  • public finance

The popular wholesale Interpretation of Financial Statements online sale

The popular wholesale Interpretation of Financial Statements online sale

The popular wholesale Interpretation of Financial Statements online sale

The popular wholesale Interpretation of Financial Statements online sale

The popular wholesale Interpretation of Financial Statements online sale

The popular wholesale Interpretation of Financial Statements online sale

The popular wholesale Interpretation of Financial Statements online sale

The popular wholesale Interpretation of Financial Statements online sale

The popular wholesale Interpretation of Financial Statements online sale

The popular wholesale Interpretation of Financial Statements online sale

The popular wholesale Interpretation of Financial Statements online sale

The popular wholesale Interpretation of Financial Statements online sale

The popular wholesale Interpretation of Financial Statements online sale

The popular wholesale Interpretation of Financial Statements online sale

The popular wholesale Interpretation of Financial Statements online sale

The popular wholesale Interpretation of Financial Statements online sale

The popular wholesale Interpretation of Financial Statements online sale

The popular wholesale Interpretation of Financial Statements online sale

The popular wholesale Interpretation of Financial Statements online sale

The popular wholesale Interpretation of Financial Statements online sale