Warning Signs for Accounting

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A declining gross margin is something that make my ears perk up. Another one is rapidly expanding sales and marketing expenses. I've dramatically preferred to invest in businesses that have a stable gross margin over long periods of time.

IN THIS EPISODE, YOU’LL LEARN:

02:52 - What is a stock and why do stocks have value?
04:40 - The main factors that increase a company’s value over time.
05:48 - What causes stock prices to move up and down and why this sometimes has nothing to do with company value.
07:51 - How share repurchases and dividends impact a company’s stock price and company value.
11:26 - Why the P/E can look inflated based on the market cycle, accrual accounting choices, a company's equity investments, etc.
14:04 - What factors influence a company’s reported earnings that you may need to adjust for when valuing a company.
21:06 - An overview of GAAP and non-GAAP accounting, what are the differences between the two, and which should investors focus on for valuation analysis.
24:44 - What are the main ways that earnings can be manipulated based on accounting assumptions used?
46:27 - What are some accounting warning signs to look out for that might suggest companies might be cooking their books?
49:54 - What discrepancies to look for in a company’s income statement vs cash flow statements.
And much, much more!

*Disclaimer: Slight timestamp discrepancies may occur due to podcast platform differences.

BOOKS AND RESOURCES

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Check out Brian’s book, Why Does the Stock Market Go Up?.
Related Episode: You CAN Beat The Market w/ Brian Feroldi - MI082.

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