Warren Buffett's 7 Rules for Analyzing Income Statements

Test your understanding of the 7 rules Warren Buffett uses to quickly analyze a company's income statement.

Business mixed 8 Questions Video Quiz
Progress 0 / 8
Q1 Beginner 1 pts

What is Warren Buffett's rule of thumb for a company's gross margin? Video Reference:
"Warren Buffett wants this number to consistently be above 40% because it indicates to him that a com..."

Timestamp: 0:30

Q2 Beginner 1 pts

According to Buffett's second rule, what should a company's selling, general, and administrative (SG&A) margin be? Video Reference:
"Warren Buffett wants this number to be under 30% which indicates to him that the product has establi..."

Timestamp: 1:00

Q3 Intermediate 2 pts

True or false: Buffett's rule of thumb for a company's research and development (R&D) margin is that it should be under 30% of gross profit. Video Reference:
"his rule of thumb is that this number is under 30% which indicates to him that the company is a simp..."

Timestamp: 1:30

Q4 Intermediate 2 pts

Which of the following is NOT one of Buffett's 7 rules for analyzing an income statement? Video Reference:
"Warren Buffett has 7 rules of thumb that he uses to analyze an income statement..."

Timestamp: 0:30

Select all correct answers
Q5 Intermediate 2 pts

True or false: Buffett wants a company's income tax margin to be approximately 20%, as that indicates the company is not trying to deceive authorities. Video Reference:
"Buffett's rule of thumb here is that this number approximately equals 20% Which is the current tax r..."

Timestamp: 2:00

Q6 Advanced 3 pts

Which of the following Buffett rules is Apple's income statement most likely to pass? Video Reference:
"let's take the look at a real income statement to see these rules of thumb in action for this we're ..."

Timestamp: 2:30

Select all correct answers
Q7 Advanced 3 pts

What is Buffett's rule of thumb for a company's profit margin? Video Reference:
"Buffett's final income statement rule of thumb relates to a company's profit margin now to calculate..."

Timestamp: 3:00

Q8 Advanced 3 pts

Which of the following is NOT one of the 7 income statement rules of thumb that Buffett uses? Video Reference:
"Warren Buffett has 7 rules of thumb that he uses to analyze an income statement..."

Timestamp: 0:30

Select all correct answers
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