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The Interpretation of Financial Statements Hardcover – May 6, 1998
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"[Graham]...formed the framework of thinking about the stock market that has inspired the investment community for nearly a century." -- Smart Money
About the Author
Spencer B. Meredith was an instructor in security analysis at the New York Stock Exchange Institute.
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Top Customer Reviews
It's true that the primary value of Graham's text is its framework, which provides concision in summarizing a potentially confusing topic. This framework persists through all four editions. Also, it's true that all four editions are pretty dated (there is no discussion of cash flow statement interpretation in any edition obviously, for example, although Graham alludes to the significance of cashflow interpretation somewhat disparagingly in the latter editions).
But all of Graham's guidelines for balance sheet analysis are still current in the latter two editions, as are his brief guidelines for bond analysis and earnings power. The first edition seems less useful in these respects.
One might assume that there is value in going back to the first edition of this small volume as one might go back to the first edition of Security Analysis. There are indeed nuggets in the first edition of Security Analysis which have been mysteriously removed from later editions. But that isn't true with The Interpretation of Financial Statements. If you can get your hands on a copy of the 1964 or 1975 edition of this book, you will likely find either more useful than this original edition.
Reading Financial Reports For Dummies by Lita Epstein
How to Read a Financial Report by John Tracy
Financial Statements by Thomas Ittelson
So much time is taken to explain diversification by many other books, but none gives you the practical expertise to make an informed decision. This book does. It is a handy reference that sits on my desk. I use it to review annual reports and to interpret online SEC filings just to make sure the companies I have invested in are actually healthy.
This book is small, but what I have found over the years is that smaller books are better. They leave out the fluff and all you get are the meat and potatoes of what you need to know.
If you take your time to understand the information presented and use it, you'll be teaching your broker a thing or two at the end of the day.
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.
The 1936 edition of "The Interpretation of Financial Statements" by Benjamin Graham, the father of the modern academic discipline of financial analysis. In brief chapters with examples, Graham explains different entries you might find on a corporation's public balance sheet, how those assets and liabilities (debits and credits) add up, and what the meaning is with regard to that corporation's financial health. There are occasional glimpses of average figures by industry, but given that they were compiled in 1935, they are more interesting as a glimpse into the past - some things have changed, much more has remained the same.
What this book is not:
1. It's not a primer on double-entry accounting. If you really don't know anything about double-entry bookkeeping, you'll find the book rough going, as basic familiarity is assumed.
2. It's not an editorial. There's remarkably little opinion given about how to value companies based on their balance sheet entries. That task is performed in the author's mammoth magnum opus, Security Analysis (I prefer the 1940 edition). This book does function admirably as a tableside glossary to that work.
3. It won't tell you how to get rich by investing. Readers looking for get-rich-quick guides should look elsewhere.
4. GAAP- or SOAP-compliant. Both Generally Accepted Accounting Principles and Sarbanes-Oxley postdated the publication of this book by many years.
I enjoyed this book and found it a pleasant, intelligent and necessary introduction to Graham's Security Analysis. If you have interest in learning about the history of financial analysis, you will probably find this book of interest as well.
Most Recent Customer Reviews
Ben is great but this book is outdated and not super useful for a modern investor.Published 1 month ago by Alex Gierczyk
This is a real gem. After this reading you will grasp financial statement and be able to spot the all to common misconceptions of things Graham stated regarding investing. Read morePublished 1 month ago by MNDLBRT
Excellent overview of how to read financial statements from a value investing perspective.Published 5 months ago by Eric Kozlowski
It makes my investment in equity market, to another level of understanding.Published 7 months ago by JEFFREY TAY