Warren Buffett on why he prefers looking at company balance sheets over income statements: ‘Harder to play games, hide’

Billionaire investor Warren Buffett looks at a company’s balance sheet rather than its income statement before making an investment decision because “it’s harder to hide or game,” and he notes that Wall Street doesn’t pay much attention to that document.

Speaking at Berkshire Hathaway’s 60th annual general meeting (AGM) in 2025, the Oracle of Omaha also revealed that it “reviews the financial statements of about 50 or 60 of our companies every month.”

Remarkably, the successful investor stepped down as CEO of Berkshire Hathaway, with his successor Greg Abel taking over the reins in January 2026.

Why does Warren Buffett prefer to look at balance sheets?

Explaining his reasoning, Warren Buffett said: “I spend more time looking at balance sheets than income statements. Wall Street doesn’t actually pay that much attention to balance sheets. But I like to look at 8- or 10-year balance sheets before I even look at the income statement. Because there are some things that are harder to hide or game on a balance sheet than you can do with an income statement.”

He acknowledged that neither document gives you a “complete answer” but added: “You still have to understand what the numbers say and what they don’t say. What they can’t say and what management would want them to say and what auditors wouldn’t want them to say…”

“There’s a lot to learn and my view is that you learn more from balance sheets then most people give them credence,” he added.

‘Charlie and I enjoyed the fact that people trusted us’

In the Q&A session of the same General Assembly, Warren Buffett also answered a question about when it would be better to act immediately (despite his patient policy). “One of the great joys, actually the greatest joy in this business, is that people trust you. That’s why I’m working at 94 with more money than anyone can count. It doesn’t mean anything in terms of how I’m going to live, how my kids are going to live, or anything else,” he said.

Adding: “But Charlie (Munger) and I both enjoyed the fact that people trusted us. They trusted us in the partnerships we had 60 or 70 years ago. We never looked for professional investors to join our partnerships. I never had one institution among all my partners – I never wanted one institution. I wanted people. I didn’t want people who sat around quarterly and gave presentations and wanted to be told what they wanted to hear. That’s what we got, and that’s why we took it. There’s a group here today. Everything went well, but don’t take action.” “You don’t want to be patient when the time comes, you want to finish it that day.”