A one-time read.
Fun (or irritating) fact, depending upon your vantage point - The Author has repeated the words "Warren Buffett" & "Durable Competitive Advantage in every page! Contains only 4-5 useful insights. Else, it is merely a crash course in accounting.

• Difference between Benjamin Graham and Warren Buffett – Graham never made a distinction between a company with a durable competitive advantage versus a company without one. He was only interested in whether the company had sufficient earning power to get it out of the economic trouble which had sent the stock price downward (i.e. buying stock at lower-than-intrinsic-value price & selling at higher price). He wasn’t interested in owning a position for 10/20 years. He believed that the super rich businesses are overpriced
• This book purportedly deals How to IDENTIFY & THEN HOW TO VALUE A COMPANY with a DURABLE COMPETITIVE ADVANTAGE
• 3 business models
o Sell a unique product or service – Coca-Cola, Wrigley, P&G
o Low-cost buyer & seller of a product/ service – Wells Fargo, CitiGroup
o Product or service consistently required by the public – Wal-Mart
• General rules –
o companies with Gross Profit Margin of 40% or better have a strong moat
o Companies with SG&A to revenue ratio below 30% have strong moat
o Stay away from Companies investing heavily in R&D because it indicates that they don’t have a strong competitive advantage. If they don’t invest in New technologies, their products will become obsolete
o Finance cost less than 15% of operating income is good
o Warren uses Income Before Taxes (Revenue – Operating cost – SG&A – Finance cost +/- non-recurring item)
o Look for companies with higher Net Earnings to Net Revenue ratio (rule of thumb – 20% or more)
o Lower Net Receivables to Sales ratio is good
o Current ratio below 1 is considered bad, above 1 is good. Interestingly, companies like Coca Cola, P&G have current ratio below 1. But, it is noteworthy that their earning power is so strong that they can tap into short-term, cheap source of borrowing & pay off the short term liabilities. Hence, current ratio is not quite useful to ascertain if there is a strong moat or not
o Company that does not have to replace PP&E generally has a strong moat. Eg. Wrigley
o Very high Return on Assets ratio may indicate vulnerability
o Adjust for treasury shares. Difference between Treasury Shares and Buyback Stock is the latter is deleted from the share capital, whilst Treasury Share (when bought back) is not deleted. Instead, it is retained for potential future issuance
o Rate of growth of Retained Earnings should be looked at
• Depreciation is the real cost of doing business. Wall Street conveniently came up with EBITDA, to mask depreciation expenses
• Remove the effect of non-recurring items i.e. profit on sale of Fixed Assets, one-time items
• Beware of companies relying heavily on short term debt – they roll over the debt i.e. borrow more short-term debt to repay the existing short-term debt
• Companies with little or no long-term debt are targets of a leveraged buyout. Eg. RJR/ Nabisco buyout in 1980s
• Paid-in capital is also known as Securities Premium
• Warren does not prefer paying dividends because shareholders would have to pay income tax thereon. Instead, he is fond of Stock Buyback. This financial engineering increases the Earnings Per Share. Eg. before buyback, company has 100 shares & Earnings of Rs.1,000. EPS is Rs. 10 . After Buyback of 500 shares, company now has 500 shares. Thus, EPS is Rs. 20
• When to sell – generally, if P/E ratio is 40 or more, its time to sell. Else, when companies lose the advantage/ when stock market is at an all-time high

Ironically the book itself does not have a durable competitive advantage

Good for beginner-level understanding. Concepts are explained throughly. Can be read in single sitting.

Полезна книга, с добри съвети. Има теми, на които би било хубаво да се наблегне малко повече и да се навлезе в подробности.
Основен недостатък на българския превод е, че не е направена абсолютно никаква аналогия с използваната при нас структура на финансови отчети спрямо представената в книгата американска отчетност.