Interpretation of Financial Statements Warren Buffett

The interpretation of financial statements Warren Buffett produces from his famous company Berkshire Hathaway are full of forward-looking statements risks moving forward, a list of companies that he owns, and more. On the surface level, the figures and numbers represented in the financial statements can be interpreted as something that is taken at face value or Book value. But when you read the statement more carefully, as in the case of the 2017 annual letter to investors shows, some of the numbers are actually a little bit misleading. Warren even states outright that some of the gains were actually due to changes in United States tax laws, which are thanks to Donald Trump.

In 2017, the financial statements in the letter to investors of Berkshire Hathaway show that the gains were about 60 billion dollars; only half of that was due to actual market gains, while the rest was due to this new tax implementation. The types of companies that Warren Buffett and Berkshire Hathaway own, the financial statements show, include Wells Fargo, Goldman Sachs, U.S. Bancorp, Phillips 66, BYD, Delta Airlines, Southwest Airlines, and more. In total, the portfolio of Berkshire Hathaway consist of about 13 different stocks (also including Apple and American Express), but the size of the investments never exceeds owning more than 25% of an entire company. In fact, the most percentage of a company that Berkshire Hathaway owns is 17% last year. The reason for this is a diversified risk, and not investing too much in one individual company.

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