Billionaire investor Warren Buffett looks at a company’s balance sheet instead of its income statement before making an investment decision, as it is “harder to hide or play games”, noting that Wall Street really doesn’t pay much attention to the document.
Speaking at Berkshire Hathaway’s 60th annual general meeting (AGM) in 2025, the Oracle of Omaha explained that he also reviews and “looks at the financial statements of about 50 or 60 of our companies every month”.
Notably, the ace investors stepped down as CEO of Berkshire Hathaway, with successor Greg Abel taking over the reins in January 2026.
Why does Warren Buffett prefer to look at balance sheets?
Explaining his rationale, Warren Buffett stated, “I spend more time looking at balance sheets than I do income statements. Wall Street really doesn’t pay much attention to balance sheets. But I like to look at balance sheets over an 8 or 10-year period before I even look at the income account. Because there are certain things it’s harder to hide or play games with on the balance sheet than you can with the income statement.”
He acknowledged that neither document gives you a “total answer”, but added, “you still ought to understand what the figures are saying and what they don’t say. What they can’t say, and what the management will like them to say, what the auditors wouldn’t like them to say…”
“There’s just a lot to be learnt and, and you do learn more from balance sheets, in my view, than most people give them credit for,” he added.
‘Charlie and I just enjoyed the fact that people trusted us’
During the Q&A session of the same AGM, Warren Buffett also answered a question on when it is better to act urgently (despite his policy of patience). “One of the great pleasures – it is the great pleasure actually in this business – is having people trust you. That’s really why I work at 94 when I’ve got more money than anybody could count. It means nothing in terms of how I’m going to live or how my children are going to live or anything else,” he said.
Adding: “But both Charlie (Munger) and I just enjoyed the fact that people trusted us. They trusted us 60 or 70 years ago in partnerships we had. We never sought out professional investors to join our partnerships. Among all my partners, I never had a single institution – I never wanted an institution. I wanted people. I didn’t want people who were sitting around having presentations every three months and being told what they wanted to hear. That’s what we got, and that’s why we’ve got this group here today. It’s all worked out. But you don’t want to be patient when the time comes to act – you want to get it done that day.”