Best valuation, financial statement analysis books?

  • BuckBuck
    Posts: 9
    Hi guys,

    as title says Im interested in hearing you opinions. I have some basic knowledge on the subject but not as near as much as I would want to so looking for a good book to start from.  


    Ive read that Financial Statements: A Step-by-Step Guide to Understanding and Creating Financial Reports by Ittelson is considered to be a good place to start from but Im unable to find it on pdf.


    Any other suggestions are most welcome. Focus is on analysis for long term stock investment and something applicable asap.



    Cheers


     
    Post edited by Unknown User at 1999-11-30 00:00:00
  • 17 Comments sorted by
  • GraemeGraeme
    Posts: 367
    Although I haven't read it (and want to) the book Valuation: Measuring and Managing the Value of Companies is very thorough. I spent about an hour flipping through it in a bookstore. It's the core textbook used by McKinsey and Co. If you're looking for a baptism by fire, try this one out
  • I had the opportuntunity to use the McKinsey book that Graeme suggested when I took a corporate finance course at university, and it is extremely comprehensive. It covers valuation in a number of different scenarios: mergers, normal operations, emerging markets, high-growth, financial companies. I find myself referring back to it whenever I find myself in unfamiliar territory.

     

    I would also recommend Quality of Earnings by Thornton O'Glove, which covers a several of the myriad of ways that accounting statements can mislead.

     

    Of course, Graham and Dodd's Security Analysis will be valuable from a conceptual standpoint.
  • For valuation, I recommend "Investment Valuation" by Aswath Damodaran. If you are not in a hurry a new edition is coming out later this year. Wink

     
  • JaeJunJaeJun
    Posts: 2,571
    Im sure you could also find the Investment Valuation ebook floating around on the internet.
  • GraemeGraeme
    Posts: 367
    Read all things.
  • What about Value Investing:  From Graham to Buffett and Beyond  by Bruce Greenwald et al.

    Not only does it explain the value analysis concept but sets forth a number of examples of actual companies.  Finally they review a number of fabled value Investors, each with a different style, or approach, to the value investing process.

    I've been reading investment books for nearly 50 years, many, many of them, some really great, like The Intelligent Investor, and some well, not so.  This one is very good.
  • somrhsomrh
    Posts: 986
    Graeme said:

    Although I haven't read it (and want to) the book Valuation: Measuring and Managing the Value of Companies is very thorough. I spent about an hour flipping through it in a bookstore. It's the core textbook used by McKinsey and Co. If you're looking for a baptism by fire, try this one out




     

    I picked this one up (at your suggestion).

    As for the topic quesiton, I actually went through Shaum's Outline on Intermediate financial accounting (they work as decent cheap standalone texts) so I could get a better understanding of how the accountants prepare the financial statements. I've always had sympathy for operationalism and figure the best way to understand the terminology is to understand the methods and techniques used to arrive at the figures.
  • GraemeGraeme
    Posts: 367
    somrh said:




     

    I picked this one up (at your suggestion).

     


    Let me know how it is! You know...in like a year or so. 

     

    Did you find it used?
  • somrhsomrh
    Posts: 986
    I couldn't find a used copy that wasn't about the same price as a new copy so I got it new (I still love the smell of a new book). I had a BN gift card that needed using so I effectively got the book for free (well, someone else bought it.)

  • Accounting Demystified

    The Interpretation of Financial Statements


    I enjoyed these the most simple yet straight to the point
    Post edited by simpleandcheap at 2013-03-05 19:57:47
    http://www.simplencheap.com Finding Value in Simple and Cheap Places
  • Have anyone read Investment Banking? Is suppose to be really good http://www.amazon.com/gp/product/0470442204/ref=ox_sc_act_title_3?ie=UTF8&psc=1&smid=ATVPDKIKX0DER
  • AntacularAntacular
    Posts: 161
    @jcgonzmo1984 I've read it, it's pretty good but also pretty basic.
  • jojojojo
    Posts: 4
    Hope someone can help me here.
    Read O'Glove's Quality of Earnings (in Jae's recommended list).
    In his 'Accts Receivable & Inventories' Chapter 8, O'Glove reiterated that "comparisons of Accts Receivable, Inventories, Sales with the same reporting period in previous years" is what matters. That is, Year 3 v Year 2 v Year 1, or Q3Yr3 v Q3Yr2 v Q3Yr1.
    What I don't understand is why not comparisons of consecutive reporting periods in the same financial yr, ie Q3Yr3 v Q2Yr3 vQ1Yr3? Surely, this would have a more immediate impact on trending (sales, inventory levels) than same period in previous years?
    Appreciate if someone could please enlighten me.  Thanks very much.
  • JaeJunJaeJun
    Posts: 2,571
    Hi jojo,

    The correct answer is Q3Yr3 v Q3Yr2 v Q3Yr1 when comparing.
    Looking at consecutive quarters will help you see a trend, but you really need to see how it did vs the 1yr ago quarter.

    e.g. for retailers, it's going to be unfair to compare the xmas quarter with the jan quarter because the holiday season is where all the money is made. January is the slowest time in retail.

    Since companies have cycles and peak, off peak seasons as well, it's important to make the same comparisons.
  • jojojojo
    Posts: 4
    Hi Jae,
    Thanks very much for your prompt clarification. The seasonal trending helps me to better understand the concept.

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