7 Best Books on Accounting & Valuation Investors Should Read

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Accounting is a very important section for investors. New investors usually finds it difficult to analyze the financial statements. While making any investment decision investors have to first analyze the financial statements like income statement, Balance sheet, Cash flow statement etc after this analysis is doneanother important thing that investors have to do is valuation. Beginners who are from a different background finds these things difficult to understand, but believe me it’s not difficult. You can learn it yourself by reading these books.
1.Accounting Made Simple: Accounting Explained in 100 Pages or Less

This a very short and sweet book on accounting. If you are a beginner I would suggest you to start with this book. The languages is very simple, everything is from basics and I believe anyone can read and understand accounting by reading this book. You can also learn how to calculate and interpret several different financial ratios.

2. How to Read a Financial Report: Wringing Vital Signs Out of the Numbers

Great book to understand the financial statements from the basics. It covers the most important thing that is the linkages of all the three statements “Cash Flow Statement”, “Income Statement” and “Balance Sheet” in great detail along with how the various numbers tie to gether.

3. Financial Statement Analysis: A Practitioner’s Guide

This book provides and excellent overview of financial statement analysis from a practical perspective. It provides an overview of the three primary financial statements and their strengths and weaknesses. The book is divided into four parts.They are: Reading between the Lines, Basic Financial Statements, A closer look at Profits, and Forecasts and Security Analysis. The book discusses how the management can manipulate revenues, expenses and earnings.  The book provides ample examples and scenarios to clearly explain points, making it an easy book to read and understand.

4. Intermediate Accounting For Dummies

This book is definitely not for someone who is a beginner. As for the concepts in this book, it covers slightly more advanced topics such as inventory cost assumptions, debt and equity treatment and other topics. Like all Dummies books, this is written in an easy to follow and understandable way so as not to confuse the reader. One of the best thing in this book is the examples of some of the critical concepts that are usually hard for most the readers of accounting.

5. Accounting for Value

This is content rich book suitable only for serious and advanced investors. It is not an easy read. It is well written book on valuations. I highly recommend this book to everyone looking to understand “How to Value a business?”

6. Financial Shenanigans: How to Detect Accounting Gimmicks & Fraud in Financial Reports

This book lists various types of accounting frauds and gives real-world examples as well as suggestions on how to detect fraud.This book could be extremely valuable if you want to avoid the companies that uses aggressive or even fraudulent accounting to hit their numbers.

7. The Little Book of Valuation: How to Value a Company, Pick a Stock and Profit

Valuation is at the heart of any investment decision, whether that decision is to buy, sell, or hold. In The Little Book of Valuation, expert Aswath Damodaran explains the techniques in language that any investors can understand, so you can make better investment decisions when reviewing stock research reports and engaging in independent efforts to value and pick stocks.Written with the individual investor in mind, this reliable guide will not only allow you to value a company quickly, but will also help you make sense of valuations done by others or found in comprehensive equity research reports.

 

 

2 COMMENTS

  1. Hi Abhishek Sir,
    I am very excited to know about Accounting & Valuation Books. It’s a first time I heard about Accounting & Valuation books through your blog. It would really helpful for investor.

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