Interpretation of Financial Statements

( 1 )

Overview

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 ...
See more details below
Available through our Marketplace sellers.
Other sellers (Hardcover)
  • All (10) from $38.51   
  • New (4) from $119.90   
  • Used (6) from $38.51   
Close
Sort by
Page 1 of 1
Showing All
Note: Marketplace items are not eligible for any BN.com coupons and promotions
$119.90
Seller since 2008

Feedback rating:

(187)

Condition:

New — never opened or used in original packaging.

Like New — packaging may have been opened. A "Like New" item is suitable to give as a gift.

Very Good — may have minor signs of wear on packaging but item works perfectly and has no damage.

Good — item is in good condition but packaging may have signs of shelf wear/aging or torn packaging. All specific defects should be noted in the Comments section associated with each item.

Acceptable — item is in working order but may show signs of wear such as scratches or torn packaging. All specific defects should be noted in the Comments section associated with each item.

Used — An item that has been opened and may show signs of wear. All specific defects should be noted in the Comments section associated with each item.

Refurbished — A used item that has been renewed or updated and verified to be in proper working condition. Not necessarily completed by the original manufacturer.

New
0060115661 New. Looks like an interesting title!

Ships from: Naperville, IL

Usually ships in 1-2 business days

  • Standard, 48 States
  • Standard (AK, HI)
$201.53
Seller since 2014

Feedback rating:

(227)

Condition: New
Brand New Item.

Ships from: Chatham, NJ

Usually ships in 1-2 business days

  • Canadian
  • International
  • Standard, 48 States
  • Standard (AK, HI)
  • Express, 48 States
  • Express (AK, HI)
$215.00
Seller since 2014

Feedback rating:

(114)

Condition: New
Brand new.

Ships from: acton, MA

Usually ships in 1-2 business days

  • Standard, 48 States
  • Standard (AK, HI)
$215.00
Seller since 2014

Feedback rating:

(114)

Condition: New
Brand new.

Ships from: acton, MA

Usually ships in 1-2 business days

  • Standard, 48 States
  • Standard (AK, HI)
Page 1 of 1
Showing All
Close
Sort by
Sending request ...

Overview

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.
Read More Show Less

Editorial Reviews

John Train
Graham ranks as this century's (and perhaps history's most important thinker on applied portfolio investment.
Michael F. Price
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.
Smart Money
Graham's ideas ... formed the framework of thinking about the stock market that has inspired the investment community for nearly a century.
Booknews
Reprint with a new introduction by Michael F. Price. Annotation c. by Book News, Inc., Portland, Or.
Read More Show Less

Product Details

  • ISBN-13: 9780060115661
  • Publisher: HarperCollins Publishers
  • Publication date: 4/1/1980
  • Edition description: REV
  • Edition number: 3
  • Pages: 128

Read an Excerpt

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...

The Interpretation of Financial Statements. Copyright © by Benjamin Graham. Reprinted by permission of HarperCollins Publishers, Inc. All rights reserved. Available now wherever books are sold.
Read More Show Less

Table of Contents

PART I. BALANCE SHEETS AND INCOME ACCOUNTSPREFACE vii
I. BALANCE SHEETS IN GENERAL 3
II. DEBITS AND CREDITS 5
III. TOTAL ASSETS AND TOTAL LIABILITIES 9
IV. CAPITAL AND SURPLUS 11
V. PROPERTY ACCOUNT 14
VI. DEPRECIATION AND DEPLETION 16
VII. NON-CURRENT INVESTMENTS 19
VIII. INTANGIBLE ASSETS 21
IX. PREPAID EXPENSES 24
X. DEFERRED CHARGES 26
XI. CURRENT ASSETS 28
XII. CURRENT LIABILITIES 30
XIII. WORKING CAPITAL 31
XIV. CURRENT RATIO 34
XV. INVENTORIES 36
XVI. RECEIVABLES 39
XVII. CASH 41
XVIII. NOTES PAYABLE 43
XIX. RESERVES 45
XX. BOOK VALUE OR EQUITY 48
XXI. CALCULATING BOOK VALUE 50
XXII. BOOK VALUE OF BONDS AND STOCKS 52
XXIII. OTHER ITEMS IN BOOK VALUE 54
XXIV. LIQUIDATING VALUE AND NET CURRENT Asset Value 55
XXV. EARNING POWER 57
XXVI. A TYPICAL PUBLIC UTILITY INCOME ACCOUNT 58
XXVII. A TYPICAL INDUSTRIAL INCOME ACCOUNT 61
XXVIII. A TYPICAL RAILROAD INCOME ACCOUNT 62
XXIX. CALCULATING EARNINGS 64
XXX. THE MAINTENANCE AND DEPRECIATION FACTOR 67
XXXI. THE SAFETY OF INTEREST AND PREFERRED DiVIDENDS 70
XXXII. TRENDS 72
XXXIII. COMMON STOCK PRICES AND VALUES 74
XXXIV. CONCLUSION 77

PART II. ANALYZING A BALANCE SHEET AND INCOME ACCOUNT BY THE RATIO METHOD 81

PART III. DEFINITIONS OF FINANCIAL TERMS AND PHRASES 91

Read More Show Less

Customer Reviews

Average Rating 5
( 1 )
Rating Distribution

5 Star

(1)

4 Star

(0)

3 Star

(0)

2 Star

(0)

1 Star

(0)

Your Rating:

Your Name: Create a Pen Name or

Barnes & Noble.com Review Rules

Our reader reviews allow you to share your comments on titles you liked, or didn't, with others. By submitting an online review, you are representing to Barnes & Noble.com that all information contained in your review is original and accurate in all respects, and that the submission of such content by you and the posting of such content by Barnes & Noble.com does not and will not violate the rights of any third party. Please follow the rules below to help ensure that your review can be posted.

Reviews by Our Customers Under the Age of 13

We highly value and respect everyone's opinion concerning the titles we offer. However, we cannot allow persons under the age of 13 to have accounts at BN.com or to post customer reviews. Please see our Terms of Use for more details.

What to exclude from your review:

Please do not write about reviews, commentary, or information posted on the product page. If you see any errors in the information on the product page, please send us an email.

Reviews should not contain any of the following:

  • - HTML tags, profanity, obscenities, vulgarities, or comments that defame anyone
  • - Time-sensitive information such as tour dates, signings, lectures, etc.
  • - Single-word reviews. Other people will read your review to discover why you liked or didn't like the title. Be descriptive.
  • - Comments focusing on the author or that may ruin the ending for others
  • - Phone numbers, addresses, URLs
  • - Pricing and availability information or alternative ordering information
  • - Advertisements or commercial solicitation

Reminder:

  • - By submitting a review, you grant to Barnes & Noble.com and its sublicensees the royalty-free, perpetual, irrevocable right and license to use the review in accordance with the Barnes & Noble.com Terms of Use.
  • - Barnes & Noble.com reserves the right not to post any review -- particularly those that do not follow the terms and conditions of these Rules. Barnes & Noble.com also reserves the right to remove any review at any time without notice.
  • - See Terms of Use for other conditions and disclaimers.
Search for Products You'd Like to Recommend

Recommend other products that relate to your review. Just search for them below and share!

Create a Pen Name

Your Pen Name is your unique identity on BN.com. It will appear on the reviews you write and other website activities. Your Pen Name cannot be edited, changed or deleted once submitted.

 
Your Pen Name can be any combination of alphanumeric characters (plus - and _), and must be at least two characters long.

Continue Anonymously
Sort by: Showing 1 Customer Reviews
  • Posted March 27, 2013

    Cardinal to one's concrete and efficient interpretation of finan

    Cardinal to one's concrete and efficient interpretation of financial statements. 

    1 out of 1 people found this review helpful.

    Was this review helpful? Yes  No   Report this review
Sort by: Showing 1 Customer Reviews

If you find inappropriate content, please report it to Barnes & Noble
Why is this product inappropriate?
Comments (optional)