The Interpretation of Financial Statements [Paperback]

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.

Fantastic reference on its own. .

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.