John Deere Balance Sheet: Fill & Download for Free

If you want to be an accountant/CPA, then I would advise an accounting degree (like the other answers here). Otherwise it is not necessary.Accounting is important, but I cannot tell you how many times I have heard a successful investor claim "I'm not an accountant" to explain why they were glossing over some detail. To be clear, these individuals do have an understanding of accounting, it’s just not as thorough as what might be expected of a talented CPA.What's most important is understanding what creates and destroys value. The best exposure you could get would be on the job training (M&A, PE, HF, etc.) but I assume you would not be asking if you had that exposure. So start with some simple accounting texts:VocabularyAmazon.com: Accounting Made Simple: Accounting Explained in 100 Pages or Less (9780981454221): Mike Piper: BooksIn my experience, people who claim that they simply cannot understand finance don’t spend enough time on vocabulary. The math is pretty simple. It’s just explained in a different language. Learn the language and everything else will follow.Integrated Financial Statement ModelIt may seem like a stretch, but once you have a grasp of the vocabulary I would work through building an integrated financial statement model (income statement, balance sheet and cash flow statement) with a five year projection. This exercise is what caused everything to “click” for me as an analyst. I built ASimpleModel.com to share this learning experience (free video-driven instruction):Start with Introduction to Financial Statements: This video series introduces the financial statements in the context of building a financial model. In other words, it emphasizes the relationships between the financial statements. When you finish this video series, take a break, and write down in your own words how the financial statements link to each other (sidenote: this is one of my favorite interview questions for entry-level analysts).Then move on to Integrating Financial Statements: This is a critical process to understand. As you work through this exercise pay attention to cash. You want to be hyper aware of the line items that generate or consume cash (this will make more sense in the videos).As you forget words take the time to look them up. To avoid having to flip back and forth between texts, use Investopedia - Educating the world about finance every time you come across new vocabulary.ValuationThen move on to texts that explain value:The Little Book of Valuation - written by Aswath Damodaran, a legend in the world of valuation. You should also consider his blog: Musings on Markets.Valuation: Measuring and Managing the Value of Companies, 5th Edition: 9780470424650: Economics Books @ Amazon.com (this one is dense, but I used it as a reference for years - an incredible resource)Financial Shenanigans: How to Detect Accounting Gimmicks & Fraud in Financial Reports, 3rd Edition: Howard Schilit, Jeremy Perler: 9780071703079: Amazon.com: Books (focuses on how financials are manipulated and will train your eye to look for irregularities)Annual ReportsThen (to echo David Ecale) start working through 10-Ks (annual reports) and pay attention to the notes. Read the shareholder letters and think about what the CEO is attempting to communicate to individuals interested in the companies ability to create value. You will come across sections like “Summary of Significant Accounting Policies” and “Recent Accounting Pronouncements” that appear dense and possibly not worth your time. Read them with Investopedia handy - it’s an education in accounting.If you want a good place to start - John Deere (link to annual report) - as practice, make sense of the following: “The one-time blacksmith shop has become a kind of bank - at least, operating income from the Deere Captive finance unite, John Deere Capital Corp., has grown to eclipse the earnings from shrinking equipment sales. Of overall operating income in the three months to Jan. 31 ag and turf sales chipped in $144 million, or 35%; financing activity, $194 million, or 48%. As recently as fiscal 2013, the respective contributions to operating income were 79% and 15%.” Grant’s Interest Rate Observer March 11, 2016Under Armour is another interesting case-study. They recently experienced strong growth in sales, but working capital outpaced this growth. Go through their 10k and examine the impact this has on cash.Finally, pick up Berkshire Hathaway Letters to Shareholders, 2012: Warren Buffett, Max Olson: 9781595910776: Amazon.com: Books - amazing amounts of insight. If you do not want to pay for the book just go to Page on berkshirehathaway.com - you can download the letters one at a time going back to 1995.More Reading…For the self-motivated an abundance of material exists. For a list of additional books - ASM Books.

I would advise doing this in three steps:Learn the vocabulary: pick up a very simple accounting text (Accounting Made Simple), and familiarize yourself with Investopedia - Sharper Insight. Smarter Investing. | Investopedia. Every time you encounter new vocabulary look it up and write down the definition. In my experience, people who claim that they simply cannot understand finance don’t spend enough time on vocabulary.Use Free Financial Modeling | ASimpleModel.com to learn how the three primary financial statements link to each other. Start with the video series titled “Introduction to Financial Statements.” And then watch the first two videos in the video series titled “Integrating Financial Statements.” Build the model as you go. This exercise is what caused everything to “click” for me as an analyst. I built ASimpleModel.com to share this learning experience (free video-driven instruction). As you work through this exercise pay attention to cash, working capital and debt items. If you are focused on the balance sheet liquidity will be important.Focus on valuation and ratio analysis. Investopedia can be helpful here as well - Ratio Analysis Definition | Investopedia. For a quick read from a true expert: The Little Book of Valuation - written by Aswath Damodaran.While important, you may not need to spend as much time on time value of money related topics in the book. It’s critical to the value of future cash flows, but if the exercise mentioned in the comment below your question does not include a projection, focus on the other aspects of the book (and after the exercise revisit these chapters).Optional (if you have time): Then start working through 10-Ks (annual reports) and pay attention to the notes. Read the shareholder letters and think about what the CEO is attempting to communicate to individuals interested in the companies ability to create value. Pay attention to ratios and metrics used in each section. You will come across sections like “Summary of Significant Accounting Policies” and “Recent Accounting Pronouncements” that appear dense and possibly not worth your time. Read them with Investopedia handy - it’s an education in accounting.If you want a good place to start - John Deere (link to annual report) - as practice, make sense of the following: “The one-time blacksmith shop has become a kind of bank - at least, operating income from the Deere Captive finance unite, John Deere Capital Corp., has grown to eclipse the earnings from shrinking equipment sales. Of overall operating income in the three months to Jan. 31 ag and turf sales chipped in $144 million, or 35%; financing activity, $194 million, or 48%. As recently as fiscal 2013, the respective contributions to operating income were 79% and 15%.” Grant’s Interest Rate Observer March 11, 2016. Also, read CAPITAL RESOURCES AND LIQUIDITY (starts on page 24) and focus on where cash is coming from.Under Armour is another interesting case-study. They recently experienced strong growth in sales, but working capital outpaced this growth. Go through their 10k and examine the impact this has on cash.Optional (if you have more time): Financial Shenanigans: How to Detect Accounting Gimmicks & Fraud in Financial Reports I like recommending this book because it focuses on how financials are manipulated and will train your eye to look for irregularities).

Two options:Buy Berkshire Hathaway Stock, when it is oversoldBuy stocks of good companiesNear as I can tell, there isn't one value formula that applies to all his holdings.That's consistent with Buffet's observation that successful investment is more an attitude than a method. Here are some themes that people have identified:Consistent Earnings. Even cyclical companies---e.g. construction products--should have earnings that are consistent compared to competitors. (American Express, Walmart)Predictable. Mature companies that do one thing well: Duracell, Fruit of the Loom, Brooks SportsProfit Margins. Companies with strong brands can charge more. Applies to Market Leading companies with low capital costs (Coke, Kraft) and also those with high capital costs and high barriers to entry (John Deere, IBM, GEICO)Market Leaders with High Barriers to entry. Many holdings in what you might call "infrastructure" companies: companies that are crucial to the functioning of broader industries (Burlington Northern). A common aspect of these companies are brands, distribution networks and specializations that makes it very difficult to set up in business against them (Chicago Bridge, Bank of NY, Cable Companies).Bang for the Buck (aka, Asset Turnover)--Efficiently generates many dollars in Sales for each dollar in Assets. Includes companies that create value from sugar, water and beans: Sees Candies, Dairy Queen. Also applies to companies that create value with expertise, brands and advertising: Moody's, Goldman Sachs.Financial Strength. Strong balance sheets make borrowing cheaper, less onerous and less dependent on economic conditions. Enables cyclical companies to keep cost and inventories low in slack times. Here's where all those wholly owned Insurance Companies (Berkshire Re) and Cyclical Companies (USG, Clayton Homes) complement one another. All those cash reserves provide cheap, just-in-time capital when demand ramps up.