I do not recommend this book. It is one thing to explain things in simple terms and another to make it appear that there is nothing more to a complex concept. This book goes over the line items of the three financial statements and explains things like what is COGS, SG&A, etc. It says everything with a prefix, “What Warren looks for is “. It makes certain absolute claims like a high percentage of gross profit spent in SG&A and R&D is bad, a company with large R&D spend obviously does not have competitive advantage (the book reasons, otherwise they would not be spending so much will they?). It misses the point that where the companies choose to spend most indicates its competitive advantage.
Another egregious error is ignoring the footnotes that has the most convoluted language and hide many truths. The book makes no attempt to even point out the existence of footnotes. In fact Warren has said before how he reads the 10-Ks fully in valuing a target. If you want to see a goo reference on interpreting footnotes, check out http://footnoted.org
The net is, don’t waste time reading this book and definitely don’t buy individual stocks based on the methods described.