How to Think Like Benjamin Graham and Invest Like Warren Buffett

122 ShowMetheMoney higher current ratios than these, aroun d3.5, with Amazon.com’s fluctuating from negative to 4.5, depending o ...

RecognizingSuccess 123 that neither GE, Microsoft, nor Amazon.com is all that different from its segment in terms of liquidity n ...

124 ShowMetheMoney on its capital, borrowing is profitable. Shareholders benefit. There is a limit to the benefit, however, for ...

RecognizingSuccess 125 its relative liquidity by measuring the speed of its sale. Inventory speed, or turns, is measured by the ...

126 ShowMetheMoney (or total sales if those sales are not broken out separately) during a period divided by the average accounts ...

RecognizingSuccess 127 divides net income by total net sales.) The standard way is as follows: Operating income Net sales There ...

128 ShowMetheMoney remain high or be raised—reaps most of the upside from that in- novation. Profit margins are driven up or dow ...

RecognizingSuccess 129 on a long-term (over one year) basis. A business may borrow capital rather than issue equity if it needs ...

130 ShowMetheMoney Return on assets is thus the toughest measure of performance base don returns, as it reveals the results of d ...

RecognizingSuccess 131 losses from such damaged books (though they have the right to re- turn damaged books to publishers, the r ...

132 ShowMetheMoney We coul dgo on an don but don’t nee dto.^3 Get acquainte dwith the key ratios mentione dabove an dyou’ll inst ...

133 Chapter9. You Make the Call A business is worth the present value of the future cash flows it generates from now until dooms ...

134 ShowMetheMoney Less obviously, you coul duse all these tools—but in different ways—for all three companies. That is, estimat ...

YouMaketheCall 135 This use of the wor d“value” is mislea ding. Balance sheets list assets at their cost when acquire drather th ...

136 ShowMetheMoney Perhaps more obviously, if Coke were liquidated, its inventory of syrup and concentrate would undoubtedly fet ...

YouMaketheCall 137 bundle of intangible assets that enable a business to generate su- perior returns on equity, investment, an d ...

138 ShowMetheMoney A neophyte investor’s mistake, in any event, is to assess business value solely on the basis of the balance s ...

YouMaketheCall 139 In assessing what the enterprise can do for you in the future, you only have present an dpast earnings availa ...

140 ShowMetheMoney counte dfor. Accounting earnings are affecte dby a host of account- ing conventions, including, for example, ...

YouMaketheCall 141 range of 8 to 12%. Consumer products businesses—those selling foods and detergents, for example—tend to remai ...