Warren Buffett and the Interpretation of Financial Statements

by Mary Buffett and David Clark Publisher: Scribner (October 14, 2008) ISBN-13: 978-1416573180

Ok – why a blog entry on a book about financial statements?

Three reasons:

1. For anyone who’s slogged through Finance classes – you know who you are - this book makes it very simple to understand. Clean, crisp and succinct – great plane reading. AND… it does it in a way that brings me to point 2…

2. This book makes it simple AND also strategic. That is, it not only explains the WHAT of Financial Statements – but WHY they matter and HOW they reflect strategy. This brings me to point 3, and why I’m writing about it in a blog dedicated to value proposition development and thought…

3. The book emphasizes the strategic power of a DURABLE Competitive Advantage (”DCA”).

Quite simply, this little, very well written book connects the dots of how a sustainable value prop (my spin on DCA) will manifest as financial performance.

Bottom line: this is a great business book for anyone wanting to get a handle on the connection of strategy to the “dry reality” of P&L, BS and SCF.

• Innovative: a new way to communicate financial statements to (non accountant) business people.
• Indispensible: laid out in straightforward reference style – you can jump to any section, whenever you want to. Very useful for a long time.
• Inspirational: ok, it’s not going to provide the answer to life’s deepest questions. But, it does a nice job of making the reader feel like they can “get it” – and I found myself breezing through, looking to get to “Interest Income”. (yes, I know that reflects on me a certain way, but it is what it is…)

Small caveat: the book tries a little too hard to make every major point from the perspective of “what Warren looks for”. Just disregard this affectation, it’s how they’re marketing the book, after all.