3. What is a Balance Sheet and Margin of Safety

Preston Pysh is the #1 selling Amazon author of two books on Warren Buffett. The books can be found at the following location:

In lesson three, we explored the importance of a Balance Sheet. We learned that current assets and liabilities are income streams and obligations, respectively, that a company will receive or pay during the next 12 months. We also learned that the equity of a business was equal to the total assets minus the total liabilities. After determining a company's equity, we can use that important number to determine the margin of safety that's associated with buying a business.

[julianbho]

I enrolled in a Masters level subject for Accounting with the intent of gaining some basic understanding of reading financial documents. It was super intense, lots of hours and I still can't grasp the concept. I've just spent less than 15 mins watching your video and it all makes sense. Both your content and delivery is perfect! Thank you for sharing.

[KingJamesVL]

Made in 2012. Still watching in 2018. 3rd time watching. Thanks for the content Preston!

[afrosamuri]

Mate you are a legend. Thank you very much for sharing this knowledge in a way the average person can understand, I'm looking forward to delving into the stock market with a bit more confidence.

[ashalk]

I study Business at a university and never understood these concepts as well as I did by watching this video! Great job Preston! Keep up the good work and please share more content if you can.

Cheers!

[toetoe]

This is some of the most valuable information that I have ever come across on the internet. I study economics in university and I feel like this video taught me more about the stock market in 14 minutes than I learn in an entire semester. If you don't already sell a product (which I'm sure you do) you should! I would buy it. Subscribed to your newsletter.

[anviyaan]

Mr. Preston Pysh, Take a bow . I have never seen a video explaining this clearly, your examples of a small business to a large business and comparing the same with the actual terminology of the stock market is simply the best way to explain anyone who is interested in stocks. I am fortunate enough to watch this video and probably will share this knowledge to many with the same examples.

Thanks a ton Preston

[ndeyecherko]

Thank you Preston for all you do. I graduated years ago with a degree in Finance and at that time I didn't take the time to really appreciate what I was learning. Your podcast and lessons are much simpler, easy to digest and listen to. thanks again.

[kitsontuli]

i wish they could teach everything as simply as this

[chioma]

I've had the Intelligent Investor book for years and before borrowed it from the library. I started investing in my mid twenties without understanding Buffet's strategy at all. Saving money good. Blowing money bad. Even with that, I earned dividends participating in DRPs, participated in my workplace 401K, purchased bonds, changed my spending habits became a Thrift store and sales only shopper. I accrued a lofty sum in just a couple of years, but lost it all through poor choices.
Trying to go back to those habits now 20 years later is tough but necessary. Thanks for helping me to finally understand the content. I feel like I will be successful using a scalpel instead of a shovel.

[lesegokoapeng]

In my years of online research, I have never found such rich, easy to understand information on company valuation. I applaud you @Preston Pysh!

[techpalle]

I am trying to read Intelligent investor. But it is hard to understand ( for the one who is not having baiscs of stocks). But your explanation is very clear and even a layman can undertstand this. I rarely applaud people :)

[poovarasanp]

Thank you so much. I have been reading "The Warren Buffet Way" sometimes it was difficult for me to understand since am a non-finance person. But your teaching help me a lot since it's in laymen's term. Appreciate your efforts

[linos]

Paedagogical, good pace, good explanation, examples, practice principals. You are basically a teacher. A really good one. Thanks!!

[TheRiddl]

It's rare to find someone who's explaining in a really simple and clear manner! awesome job friend !

[kellyskeete]

This is hands down the best video series!

[Mrswatkinsu]

Loving these lessons!! You are a great online teacher, your presentation and format is very organized and paced in manageable doses of information for anyone wanting to learn the Buffet way. Thank you times ten.

[davef]

You're a fantastic teacher, thank you for sharing this knowledge for free.

[benhansen]

You are such a great teacher! Thank you so much for what you do. Tremendously valuable. So easy to understand. Wow, it is so rare to find that level of pedagogy anywhere

[nancylan]

This is so much better than any course I have paid for. That's what I love about YouTube!

[rajvardhanshinde]

Wow, You are an amazing teacher. I used to think the income statement is the most important, but after watching the video, I realized how the complete picture turns upside downs after having a look at the balance sheet. Curious to complete the whole series and know more about cash flows.