Accounting Connections
I just wrote an article over at GuruFocus that I think is worth reading. I get a lot of questions asking what’s a good accounting book to learn from. Right now, I’m reading John Tracy’s How to Read a Financial Report.
The point of the book is seeing the connections between the financial statements. That’s so important. And it’s really the only thing I have to say about accounting. It’s about fluency. It’s not about knowing in detail how this or that is calculated. It’s about knowing how things on the income statement and the balance sheet and the statement of cash flows work together to tell the story of a business.
Recently, I’ve written 3 articles that show how investors can use accounting:
DuPont Analysis for Value Investors
Warren Buffett: Berkshire Hathaway, Leverage, and You
Warren Buffett: Inflation, Depreciation, and the Earnings Mirage
If you want to see how I think about accounting, you should start with those articles.
Talk to Geoff About Accounting Connections