What are Cost of Goods Sold and What’s Included in it?
Controlling costs remains one of the more important jobs of management. They must control the costs of producing revenues, which reflect their profits. One of the best ways to control costs is to ensure the costs of goods sold remain under control. As companies expand, sometimes these costs grow, as seen by Google and Microsoft. […]
Understanding the Importance of Revenue Recognition Policy
“It’s easier to fool people than to convince them that they have been fooled.” -Mark Twain Understanding a company’s revenue streams and how they generate them remain important parts of analyzing companies. A company’s revenue recognition policy will help investors understand how and when they generate revenue. Each business operates from a different business model. […]
How Does PayPal Make Money?
“What an investor needs is the ability to correctly evaluate selected businesses. Note that word ‘selected’: You don’t have to be an expert on every company or even many. You only have to be able to evaluate companies within your circle of competence. The size of that circle is not very important; knowing its boundaries, […]
The 3 Main Elements of Patient Investing: Why It Works
Updated – 12/6/23 The nature of the stock market makes patient investing the BEST investing. Smart people have observed this for many decades. Two easy catch phrases summarize it nicely: “Slow and steady wins the race.” “The tortoise beats the hare.” But being truly patient regarding the stock market can be much harder than it […]
Beginner’s Guide to Total Current Assets
You can use total current assets to assess a company’s financial standing. Today’s post will teach us the formulas to use and what to do with the results. The balance sheet of a business, usually referred to as a “statement of financial position,” lists the company’s assets, liabilities, and equity (net worth). The income statement, […]
What We Can Learn From Warren Buffett’s Four Pillars of Investing
Warren Buffett has covered every aspect of investing over the years. Whether in one of his letters to shareholders, an interview, or an essay, a laundry list of investment tips drawn from the content can help get anyone started from covering how to consider risk against reward, or how to consider portfolio concentration, for example. […]
Warren Buffett’s Railroad Investment
Updated 9/15/2023 2007, Warren Buffett revealed he had bought over 60 million shares in Berkshire’s first railroad. Buffett continues as our generation’s greatest investor. And studying his investments can give us insights we can use in our decision-making. Many investors look up to Warren Buffett because he makes success appear attainable. Buffett’s yearly letters to […]
The Importance of Pricing Power in a Company
“The single most important decision in evaluating a business is pricing power. If you’ve got the power to raise prices without losing business to a competitor, you’ve got a very good business. And if you have to have a prayer session before raising the price 10 percent, then you’ve got a terrible business.” Warren Buffett […]
Evaluating Management with a Simple Checklist for Investors
“When a management with a reputation for brilliance tackles a business with a reputation for bad economics, it is the reputation of the business that remains intact.” Warren Buffett Most investors understand the importance of analyzing a company’s financials. And the importance of finding great management to run the same company. But, evaluating management is […]
The Right Investment Mindset when Your Stocks Are Down
When a stock you own sees a price drop, it can be very good or very bad. Very good because it’s an opportunity to buy more, or very bad because you should sell. The difference is in the impact of long term business results. When a stock drops, a lot of the time it’s because […]
