We have seen that equity investment has provided decent returns to those who have made an investment into a decent business with having decent management. I have also explained a similar concept to my articles of Pat Dorsey and Kite Flying regarding business + management combination.

Accounting is a language of business, we need to understand it well so that we can make communication with numbers.

I will try to explain all manipulation in a simple manner into the upcoming issues of the same series.

Entire series of “Numbers tells you everything” is based on the books –

I have tried to cover up concepts available with the above books.



Warren Buffett’s Letter 2015

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Similarly, India has a GDP growth rate of 7.20% and population growth of 1.10% which increase to the per capita growth by 6.10%. if we consider average per capita growth rate of around 5% for coming 20 years then it will reach the gain of 100%+. So that per capita will increase to $3927+ from $1963.55 currently, which will enhance the standard of living of our future generation.

Warren Buffett’s Letter 2016

Mr. Buffett has explained mistakes of acquiring businesses –

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Mr. Buffett on assets funding through debt-

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Mr. Buffett on fear –

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When we are fearful with our investment decisions then we focus on the each and every aspects which can result in the erosion of the capital. When I make an investment, I assume that from the next day of my investment; 1929 great depression will hit so whether I survive or not? Survival should be much more important to build a wealth which is not focused if we do not remain fearful with our investment.

Mr. Buffett on the repurchase of shares –

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Many companies are coming up with the repurchase of shares, we should consider that whether repurchase did at a discount to the intrinsic value or at a premium. If a company is paying a premium to repurchase shares then it will not benefits much to the shareholders. If any company make a decision to repurchase shares at a discount to the intrinsic value then we should look for the company. Many companies which are into commodity business or into the cyclical nature of the business also make a repurchase share during the worst time.

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Examples of Buyback at discount to intrinsic value, cyclical companies buyback, companies which have done a buyback rather repay debt SIMPLE IS BETTER – ISSUE -13 – BUYBACK

Warren Buffett’s Letter 2017

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If our investment does not provide us with protection against the inflation then we should not stay for a long term with a particular investment. Our first motive for making an investment should be protected against inflation and then create wealth for the long-term horizon.

Warren Buffett’s Letters


I have mentioned during the series of Warren Buffett’s letter that buyback done by the company considers good. Also when the market value of the company is available at discount from intrinsic value and company does not have a better opportunity to make an investment then company has to repurchase own shares. We have heard that the company having good management then they come up with a buyback and others will come up with a dilution of capital. The buyback is one of the criteria for judging a capital allocation decision of management that whether good or not.

What is Buyback?

For Detail Issue, Click here —> SIMPLE IS BETTER – ISSUE -13 – BUYBACK


We have seen in the previous simple is better to issue regarding profit and loss account in Issue-8, balance sheet in Issue-9, Relationship between balance sheet and profit & loss account in Issue-10, and Cash flow statement in issue-11. Analysis of balance sheet is essential for a better understanding of the financial strength of the company. Balance sheet majorly focuses on the sources from where we have brought the fund and at where we have deployed that fund.

Equity and liability side shows us a source of funds and assets side show us an application of the funds which we have brought.

We have to check in detail that does fund get proper utilization which company has to bring or not. For proper understanding, we need to prepare and analysis fund flow statement. Using fund flow analysis, we can come to that fund is effectively utilized by the management or not. This analysis also helps us to know where the fund is going and from where the fund is coming to the business. Does fund utilize to the wrong places or does fund brings from the sources which can be not favorable for the owners of the company?

For Detail Issue, Click here —> SIMPLE IS BETTER – ISSUE -12 – FUND FLOW ANALYSIS