Warren Buffett is considered one of the richest men in the world and the most successful investor of the 20th century. As a primary shareholder, chairmen and CEO of Berkshire Hathaway he has conducted very intelligent business and investment tactics that others want to learn from and copy.
There are several well-known Buffett strategies that will help any investor, businessmen, or regular tax payer looking to invest or when meeting with our tax experts like tax preparation Encinitas accountants.
A major investment strategy that Warren Buffett utilizes is a modification of the value investing approach that his mentor Benjamin Graham once used. Before buying a business, Warren looks to see if the business has earnings with an upward trend with consistent margins, the debt-to-equity ratio was low and if it was high he made sure that the company could repay their debt.
He also ensures that the return on equity (ROE) is consistent and more than 12%, the company retains earnings for growth, the company has a low maintenance cost of operations, they reinvest earnings in good business opportunities, and the company is able to adjust prices for inflation. Buffett does not hurry to invest in businesses. He will wait for market corrections or downturns to buy successful businesses at reasonable prices. Buffett is known for creating the term “economic moat” which means that he prefers to attain companies that have more competitive advantages over other businesses. As a result of these investment strategies, Buffett has become a very wealthy and successful man who has earned billions of dollars.
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