Financial Analysis Quotes

What an investor needs is the ability to correctly evaluate selected businesses. Note that word “selected”: You don't have to be an expert on every company, or even many. You only have to be able to evaluate companies within your circle of competence. The size of that circle is not very important; knowing its boundaries, however, is vital.

Obviously, consideration of costs is key, including opportunity costs. Of course capital isn't free. It's easy to figure out your cost of borrowing, but theorists went bonkers on the cost of equity capital. They say that if you're generating a 100% return on capital, then you shouldn't invest in something that generates an 80% return on capital. It's crazy.

Accounting is the language of business.

Making an investment decision is like formulating a scientific hypothesis and submitting it to a practical test. The main difference is that the hypothesis that underlies an investment decision is intended to make money and not to establish a universally valid generalization.

You have to know accounting. It's the language of practical business life. It was a very useful thing to deliver to civilization. I've heard it came to civilization through Venice which of course was once the great commercial power in the Mediterranean. However, double entry bookkeeping was a hell of an invention.

I look like an accountant. And no offense to accountants! There's some really cool accountants out there.

Economics comes easily to me, and we all seek out what we do well in life. I had in mind becoming a businessman. And I was good at logic and reasoning; figures were comfortable inside my head.

All intelligent investing is value investing - acquiring more that you are paying for. You must value the business in order to value the stock.

Proper accounting is like engineering. You need a margin of safety. Thank God we don't design bridges and airplanes the way we do accounting.

In fact I've probably never seen such a wide moat.

Berkshire was built on the eternal verities: basic mathematics, basic horse sense, basic fear, and basic diagnosis of human nature to make predictions regarding human behavior. We stuck to the basics with a certain amount of discipline and it has worked out quite well.

My most difficult class at Harvard Business School would have to be finance.

The reality is that a person who has always struggled with numbers is unlikely to be a great accountant or statistician.

Great investment opportunities come around when excellent companies are surrounded by unusual circumstances that cause the stock to be misappraised.

In the ideal scenario, consultants work for a board, and they're helping the board check on certain aspects of management. Their work is made public and transparent.

Reviewing a government budget is much like going through the attic in an old home.

When you see a 'Shark fight' erupt, we aggressively want to understand what we are committing our money toward.

The stock prices of networking equipment companies like Cisco Systems and Nortel Networks sometimes seem as if they are priced for perpetual success.

It all comes down to interest rates. As an investor, all you're doing is putting up a lump-sump payment for a future cash flow.

After a careful examination I concluded that the story would not only repay the cost of publication in book form, but would yield some profit. Possibly I was helped to that conclusion by my firm conviction that the volume would prove a strong anti-slavery document.

More and more investors may be coming into markets everywhere but that doesn't mean that the markets are really getting more and more efficient, even in the United States. It does mean that there is more access for savvy investors who watch the money flows.

One of my rules for investing is, I don't invest in a deal where I don't think I have an unfair advantage and where I don't think I can personally impact the outcome.

Business is many things, the least of which is the balance sheet. It is a fluid, ever changing, living thing, sometimes building to great peaks, sometimes falling to crumbled lumps.

Investing in stocks is an art, not a science, and people who've been trained to rigidly quantify everything have a big disadvantage.

The rating agencies historically actually did a pretty good job rating regular bonds.