MGMT 1A, Fall 2015

Julie Ann Gardner-Treloar

NAME: VIKRAMVIR SINGH

Learning how to read financial statements is the key to making prudent financial investment
decisions. This assignment gives you the opportunity to learn how to read financial statements
and gain perspective as to how much information can be acquired concerning a publicly traded
company by reading the annual report and 10-K. This assignment also helps you to understand the
interrelationship between the financial statements and the notes to the financial statements. In
addition, you will be able to glean tidbits of wisdom from the Oracle of Omaha.
To complete the assignment, you need to refer to the Berkshire Hathaways financial statements
for calendar year 2014 (for the year ended December 31, 2014).
**This assignment must be TYPED directly onto this document.**
You will need to access the information in two different locations:
A. Berkshire Hathaways Annual Report at Berkshire Hathaways website (Please access the

entire Annual Report, not just the Letter to Shareholders. The Letter to Shareholders
in contained in the Annual Report)
B. Berkshire Hathaways 10-K at the SECs web site (www.sec.gov)
You must work on this assignment by yourself. IT IS NOT A GROUP PROJECT. Any
students working together will receive zero on the assignment.
Do not plagiarize. Use your own words. Every answer needs to be paraphrased or placed in
quotations. Quotations should be limited.
When computing percentages, carry all answers out to two decimal places (i.e., 12.34%).
The following information can be obtained from Google and the Annual Report at the companys
web site.
I.

Refer to Google
1. Who is Warren Buffett? How old is he?
Warren Buffet is an investor who is the CEO and largest shareholder of Berkshire
Hathaway. Warren Buffet is 85 years old.
2. Where is Warren Buffett on the Forbes The Forbes 400, The Richest People in America list,
and what is the source of his wealth? Where is Warren Buffett on the Forbes The Worlds
Billionaires list? Where is Berkshire Hathaway on the Fortune 500 list of largest U.S. companies
by gross revenue?
Warren Buffett is #2 on The Forbes 400 list. The source of his wealth is the stock market and
Berkshire Hathaway. Warren Buffet is #3 on the The Worlds Billionaires list. Berkshire
Hathaway is #4 on the Fortune 500 list.

II.

Refer to the Berkshire Hathaway Chairmans Letter in the Annual Report

3. What is the overall gain in book value growth of Berkshire Hathaway from 1964 to 2014?
What is the overall gain in growth of the S&P from 1964 to 2014? What is the compounded
annual growth for Berkshire and for the S&P from 1965 to 2014?
Compounded annual growth for Berkshire from 1965 to 2014 was 19.4%.

4. How much did the per-share book value of both Class A and Class B stock change in 2014?
The per-share book value of both Class A and Class B stock changed by 8.3%.
5. Who is Charlie Munger? How old is he?
Charlie Munger is the Vice-Chairman of Berkshire Hathaway and he is 91 years old. He is also an
investor and business magnate similar to Warren Buffet,
6. Why has the gap between Berkshires intrinsic value and its book value has materially widened?
What is the increase in Berkshires per-share intrinsic value over the past 50 years?
Based on per-share book value, Berkshire has underperformed relative to the S&P in how many
years since 1964?
The gap was widened because the cost based carrying value has never been changed upward
despite the increase in the value of the investments Berkshire makes now.
7. What are the Powerhouse Five? What does each business do? How many of these companies
have been acquired by Berkshire Hathaway in the last 10 years? How much pre-tax earnings did
the Powerhouse Five record in 2014?
The Powerhouse Five represent Berkshires largest-non insurance businesses. It consists of five
companies Berkshire Hathaway Energy, BNSF, IMC, Lubrizol, and Marmon. Berkshire Hathaway
has acquired four companies in the last 10 years. Powerhouse Five recorded $12.4 billion in pretax earnings.
8. How much will be spent on improving BNSF in 2015? Is this amount significant? What is being
acquired with the money being spent?
$6 billion will be spent improving BNSF plant and equipment. This amount is significant because
it is 50% more than the next competitor.
9. Berkshires insurance operation has operated at an underwriting profit for how many
consecutive years? How much did the float grow during that time?
The insurance operation has operated at an underwriting profit for 12 years and the float has
grown from $41 billion to $84 billion.
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10. What is a bolt-on acquisition? How many bolt-on did Berkshire make in 2014? What was
the aggregate cost of the bolt-ons? What was the largest bolt-on and how much did it cost?
A bolt on acquisition is one in which the acquiring company adds a company to one of its larger
platform companies. Last year Berkshire made 31 bolt on acquisitions for a total aggregate cost of
$7.8 billion. Duracel was the largest bolt on acquisition totaling $2.9 billion.

11. What company did Berkshire and 3G Capital group acquire two years ago? What does this
company manufacture? What is Berkshires favored arrangement? What does this mean? Did
Berkshire obtain equity in the acquisition of Tim Hortons by Burger King? What occurred in 2015
with respect to Kraft, 3G and Berkshire? Where is Jorge Paulo Lemann on the Forbes list of the
Worlds Billionaires and how did he make his billions?
Berkshire and 3G capital group acquired Heinz, a ketchup manufacturer. The favored arrangement
is to be a permanent equity partner. Berkshire did not obtain equity in the acquisition of Tim
Hortons by Burger King.
12. What is Van Tuyl Automotive? What does Buffett hope to do with Van Tuyl Automotive?
Van Tuyl Automotive is a group of 78 automotive dealerships. Buffet hopes to grow Van Tuyl
Automotive into a much bigger firm with the purchases of more dealerships.

13. What are the Big Four? What percentage of each Big Four is owned by Berkshire
Hathaway? What is Berkshire Hathaways share of the Big Four earnings? How much of it was
paid out to Berkshire? How much has the value of these four investments increased since
Berkshire purchased them? What doubles Berkshires chances of finding great investments?
Big Four consist of the following four companies; American Express, Coca-Cola, IBM, and Wells
Fargo.
14. What was the largest purchase in Berkshires history and what was Berkshire betting on?
What do Warren and Charlie believe to be a sure thing? What are Buffetts thoughts on America
and the U.S. economy? For whom would Buffett buy a one-way ticket? What five industry
investments, made by Berkshire, capitalize on the continued growth of America?
BNSF was the largest purchase in Berkshires history and Buffet as betting on the economic future
of the United States. Warren and Charlie back the United States because they believe there is
nothing more of a sure-bet, furthermore they believe that there is nothing to be gained by betting
against the United States.
15. What are the four major operating sectors of Berkshire?
The four major operating sectors of Berkshire are Insurance, Regulated Capita Intensive
Businesses, Manufacturing/Service/Retailing Operations, and Finance and Financial Products.
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16. What is float in the insurance business? How does float benefit Berkshire Hathaway? How
much float did Berkshire have in 2014? What is noteworthy about Buffetts purchase agreement
with Ringwalt? What was the purchase price of Ringwalts companys? How much is National
Indemnity worth today?
Buffet purchased Ringwalts company for $8.6 million on a 1 page homemade contract.
National Indemnity is worth $111 billion today. Float is the money the insurers have collected
from the insured upfront. Float provides Berkshire Hathaway capital to invest with. Berkshire has
$84 billion in float.
17. What does Ajit do? What new business did Ajit form last year?
Ajit Jain manages the Berkshire Hathaway Reinsurance Group. Ajit formed the Berkshire
Hathaway Specialty Insurance.
18. What test do most insurance companies flunk? Why do they flunk?
Most insurance companies fail to walk away if the appropriate premium cant be attained. Most
companies fail this test because they cant stop providing services that their competitors are
eagerly pursuing.
19. What is GEICO? What makes GEICO successful? What is different about the way GEICO
operates that has created a cost advantage? (see http://gregspeicher.com/?p=40). What was
GEICOs market share in 1995 compared to 2014? Why does Buffett like the gecko?
Geico is an auto insurance company. Geico is successful because it provides low cost insurance
because it is a low cost operation. Geicos market share has grown from 2.5% to 10.8% from 1995
to 2014. Buffet likes the Gecko because he works for free.

20. In what line of business are BNSF and Berkshire Hathaway Energy? What is a key
characteristic of both BNSF and Berkshire Hathaway Energy? What is BNSFs interest coverage?
What is interest coverage?
BNSF and Berkshire Hathaway Energy are both capital-intensive businesses. A key characteristic
of both businesses is that the investment is a long-term regulated asset that is partially funded by
long-term debt that is not guaranteed by Berkshire Hathaway. Interest coverage is pre/tax
earnings/interest. BNSFs interest coverage is a little over 8:1.
21. What does BNSF stand for? What percentage of all ton-miles does BNSF transport? How does
the fuel efficiency of rail compare to trucks?
BNSF stands for Burlington Northern Sante Fe Corporation. BNSF transports 15% of all tonmiles. 500:1 is the fuel efficiency ratio for rail to truck per one gallon of diesel fuel.
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22. What will society forever need? How did BNSF perform compared to Union Pacific in 2014?
How much will be spent in 2015 on improving BNSFs railroad operation and what percentage of
BNSFs revenue is this? How much did Berkshire Hathaway Energy and BNSF contribute to
Berkshires bottom line in 2014?
Society forever needs massive investments in both transportation and energy. Union Pacific
earnings were significantly better than BNSF in 2014. $6 billion will be spent on improving
BNSFs railroad operation and this represents 26% of revenue. BHE contributed $1.8 billion to
Berkshires bottom line.

23. What is an intangible asset? Per Buffett, what is the disparate nature of intangible assets?
What is Buffetts criticism of GAAP with respect to intangibles? What is Buffetts perspective on
the difference between depreciation and amortization? Why does Buffett think EDITDA should
not be used as a valuation guide? read the following:
http://www.gurufocus.com/news/336084/munger-klarman-and-buffett-on-ebitda
www.charleswarner.us/articles/WarrenBuffett_EBITDA.doc
Buffet thinks EDITDA should not be used as a valuation guide because taxes, interests, and
depreciation are real expenses. EDITDA is not mentioned in the financial reports of reputable
companies.
24. What is the range of products sold by the Manufacturing, Service and Retailing Operations
section?
Lollipops to jet airplanes.

25. What do XTRA, CORT, Berkadia, and Berkshire Hathaway HomeServices do?
XTRA owns and leases over-the-road trailers.
HomeServices is a real estate brokerage firm.
Cort conducts leasing and rental operations of furniture.
Berkadia is in the business of servicing commercial real estate loans.

26. What does Clayton Homes do? How many manufactured homes did Clayton sell in 2014?
What percentage of the market does that represent? What helped Clayton to be profitable during
and since the 2008 financial crisis?
Clayton Homes is a homebuilder. Clayton Homes sold 30,871 manufactured homes in 2014,
which represents about 45% of the market. The $13 billion mortgage portfolio helped Clayton stay
profitable following the 2008 financial crisis.

27. What was the total pre-tax earnings of the Finance and Financial Products section in 2014?
Total pre-tax earnings $1.8 billion.

28. With respect to Berkshires investments in other publicly traded companies, what percentage
of the following companies does Berkshire own? Calculate the percentage in value that each
investment increased or decreased since Berkshires acquisition.
American Express---- 14.8%-------- 996% increase
Coca-Cola------ 9.2%------ 1200% increase
Goldman Sachs Group-----3%---- 237.6% increase
IBM----- 7.8%----- 6.14% decrease
Proctor and Gamble--- 1.9%---- 1293% increase
Wal-Mart Stores--- 2.1%---- 53% increase
Wells Fargo--- 9.4%----- 123% increase
29. What happened with Tesco and what did it cost Berkshire? What is Buffetts example with
respect to his statement, In the world of business, bad news often surfaces serially?
In 2012 Berkshire has 415 million shares of Tesco, a worldwide grocer. Buffet sold Tesco at a
loss.The after-tax loss from Tesco was $444 million. Buffet provides the example of finding a
coach roach, when you find one, there are most likely more.
30. Summarize the key points made by Buffett on page 18 and 19, with respect to investing.
Volatility and risk are not synonymous. The small investor can outperform institutional investors
because of fees along the way. The goal of investing is to increase purchasing power. Investors can
avoid making stock ownership risky by controlling their own behavior.
31. How can investors, by their own behavior, make stock ownership highly risky?
Investors can make stock ownership highly risky by actively trading, trying to time market
movements, using borrowed money, and not enough diversification.
32. Who are Todd Combs and Ted Weschler? How old are they?
Per Buffett in this article, how should someone prepare for an investing career, which very few
people do? (See http://www.omaha.com/article/20130428/MONEY/704289987)
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Todd Combs and Ted Weschler are 42 and 51 respectively. They are investor managers
representing Buffets succession plans. Anyone can prepare for an investing career by reading
financial documents and reports every day.
33. Per Buffett, a serious investor will read The Intelligent Investor by Benjamin Graham. Who is
Benjamin Graham and what is he known for? Did Buffett know Graham personally?
Benjamin Graham is a British economist who is known for value investing. Buffet knew Graham
personally.
34. What can you shop for at the Annual shareholders meeting?
You can shop for dozens of products produced by Berkshire subsidiaries.
35. What appeals to you the most about the shareholder meeting?
36. What has Max Olson compiled?
Max Olson has complied Berkshire letters.
37. How many pages are in the Berkshire Hathaway tax return? How many employees are at
Berkshire Hathaways Omaha office (headquarters)? How many people do Berkshire and its
consolidated subsidiaries employ? What is smothered on Buffetts hamburgers?
24 employees work at the Berkshire Hathaways Omaha office. The Berkshire tax return is 24,100
pages. Heinz ketchup is smothered on Buffets hamburgers.
38. What are Berkshires six criteria for a potential acquisition of a business? How long does it
take to obtain a response from Berkshire with respect to a business acquisition?
The six criteria for a potential acquisition of a business are large purchases, demonstrated
consistent earning power, Businesses earning good returns on equity, Management in place,
Simple Businesses, and an offering price. It takes about 5 minutes to obtain a response from
Berkshire with respect to a business acquisition.
39. What is cigar-butt investing and how did Charlie cure Buffett of cigar-butt investing? What is
Charlies important blueprint?
Cigar- butt investing is when you buy a cheap company and hope for a favorable turn of the events down
the roads that allow you to make a profit. Charlies important blueprint is to buy wonderful businesses at
fair prices.

40. Who are the auditors of Berkshire Hathaway (see page 47)? (Note: If you cannot find page 47
it is because you are not looking at the annual report. Refer to instruction A. at the top of the
assignment.)
Deloitte and Touche LLP
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41. What was the auditors opinion on the financial statements for 2014?
The auditors opinion is that the financial statements present fairly.
III. Refer to the Consolidated Balance Sheets
42. Fill in the following blanks. (dollars in millions)
Total Assets =
Total Liabilities +
As of 12/31/2014:
526,186
283,159
As of 12/31/2013:
484,931
260,446

Shareholders Equity
243,027
224, 485

43. What is Berkshire Hathaways total contributed capital? (dollars in millions)

Common
Capital in excess of par Treasury
Stock
value
Stock*
As of
35,573
42,732
(1,763)
12/31/2014:
As of
35,472
44,025
(1,363)
12/31/2013:

Total
76,542
78,134

*Treasury Stock is stock that is bought back by the issuing company (in this case Berkshire Hathaway).
Treasury stock reduces the amount of outstanding shares.

44. What is the total dollar amount of earnings that Berkshire Hathaway has retained in the
company since its inception? (dollars in millions)
As of 12/31/2014:
163,620
As of 12/31/2013:
143,748
45. Compute the difference in the retained earnings amount that you recorded above. Compare this
to the net income reported in fiscal 2014. What is the difference?
a. Difference in retained earnings
19,872
b. Net Earnings (Net Income)
20,170
attributable to Berkshire in fiscal
2014 (from the Income Statement)
c. Difference (a b)
298
46. Why (or why not) is there a difference (See Statement of Changes in Shareholder Equity)?

47. Refer to the Retained Earnings Column of the Consolidated Statement of Changes in
Shareholders Equity. Does Berkshire Hathaway pay dividends? Why or why not? How does the
Retained Earning column help to answer this question?
Berkshire Hathaway does not pay dividends because Warren Buffet believes that these earnings
should be reinvested. The retained earning column helps us determine this because if Berkshire
did give dividends they would be accounted for in the Retained Earning Column.
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48. What amount is included in Berkshire Hathaways Property, Plant and Equipment for Railroad,
Utilities and Energy at 12/31/14 per the Balance Sheet?
$ 115, 054 (in millions)
49. What types of assets are included in Property, Plant and Equipment for Railroad, Utilities and
Energy and what are the ranges of useful lives of these assets (see Note 10 to Consolidated
Financial Statements)?
Land, Building and improvements, machinery and equipment, and furniture are assets included in
the Property, Plant and Equipment for Railroad, Utilities, and Energy. The useful lives of these
assents range from 2 to 40 years.
Building ----- 2-40 years
Machinery and Equipment----3-25 years
Furniture----- 2-18 years.
50. What are the definitions of depreciation and accumulated depreciation (refer to your
textbook)? How much accumulated depreciation is there for Property, Plant and Equipment for
Railroad, Utilities and Energy for 2014 (See Note 10 to Consolidated Financial Statements)?
There is $ 25,836 ( in millions) in accumulated depreciation.
Deprecation is an expense on the income statement, whereas accumulated deprecation is an asset
on the balance sheet.
Accumulated depreciation is the amount of an assets initial price that is allocated to depreciation
expense.
51. On the Asset portion of the Balance Sheet, in the Insurance and Other section, what is the
total amount of Equity Securities at 12/31/2014? Why does the total market value on pg. 17 not
equal the Investments in Equity Securities on the Balance Sheet in the Insurance and Other
section? (see Note 4 to Consolidated Financial Statements)

52. What is the total amount of Unearned Revenue (unearned premiums) on the Balance Sheet
with respect to the Insurance Business at 12/31/2014? What are unearned premiums?

IV. Refer to the Berkshire Hathaway Income Statement. (Consolidated Statement of

Earnings)
(Note: Net earnings and net income refer to the same thing.)
53. What is the total amount of Earned Insurance Premiums on the Income Statement at
12/31/2014?
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54. Fill in the following blanks.

Total Revenue
Total Costs and Expenses
Earnings before income tax
Net Earnings attributable to
Berkshire
Net Earnings per share
attributable to Berkshire
shareholders

For the year

ended 12/31/14
$194,673
$166,568
$28,105
$19,872

For the year

ended 12/31/13
$182,150
$153,354
$28,796
$19,476

$12,092

$11,850

For the year

ended 12/31/12
$162, 463
$140,227
$22,236
$14,824
$8,977

(IN MILLIONS)

55. Calculate the Revenue growth and growth in net income, filling in the blanks below.
Fiscal 2014 vs. Fiscal 2013 Fiscal 2013 vs. Fiscal 2012
Revenue growth (as a %)
6.88%
12.12%
Growth /(decline) in net earnings
2.03%
31.38%
attributable to Berkshire (as a %)
Calculate Berkshire Hathaways profit margin:
For the year ending:
12/31/14
Profit margin*
.104

12/31/13
.109

12/31/12
0.094

*The profit margin, or return on sales (ROS) is computed as Net Income/Net Sales.

Use Net Earnings, not Net earnings attributable to Berkshire

V. Refer to Berkshire Hathaways Cash Flow Statement.
56. Fill in the following blanks.
(a)
(b)
(c)
For the year
ending:

12/31/14
12/31/13

Net Cash
Flow from
Operating
Activities

32,010
27,704

Net Cash
Flow from
Investing
Activities

(19,369)
(27,535)

Net Cash
Flow from
Financing
Activities

2,731
961

(d)

Net change in cash

(SUM of columns
a,b,c,d)

Effect of
foreign
currency
exchange
rate
changes

(289)
64

$15,083,000,000
$ 1,194,000,000

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57. Compute the change in the Cash and Cash Equivalents account (on the Balance Sheet), filling
in the blanks below.
12/31/14
12/31/13
Difference
Cash and cash equivalents
$63,269
$48, 186
$15,083
(Include cash for Insurance,
Railroad and Finance)

How does the last column in your response to question 56 for 12/31/14 correspond to the
difference that you just computed? Why?
Those two numbers are equal to each other because cash equivalents is the sum of all the
cash from Berkshires various enterprises.
58. How much cash did Berkshire Hathaway use for additions to property, plant and equipment?
In fiscal year 2014 (ending 12/31/14)
$15,185,000,000
In fiscal year 2013 (ending 12/31/13)
$11,087,000,000
59. How much cash did Berkshire Hathaway use for acquisitions of businesses in 2014? What was
the primary acquisition in 2014 and how much did the acquisition cost (see note 2)?
Berkshire Hathaway used $4,824,000,000 for acquisitions. The primary acquisition was Duracell
and it cost $2.9 billion.

VI. Notes to the Consolidated Financial Statements

60. Refer to Note #1 Summary of Significant Accounting Policies. List the business activities in
which Berkshire Hathaway subsidiaries are engaged.

BerkshireisinvolvedinthefollowingbusinessactivitesInsuranceand
reinsurance,freightrailtransportation,utilitiesandenergy,manufacturing,service,
retailingandfinance.
61. Refer to Note #1 regarding Summary of Significant Accounting Policies. What is included in
cash equivalents?

CashEquivalentsincludefundsinvestedinU.S.TreasuryBills,moneymarket
accounts,demanddepositsandotherinvestmentswithamaturityofthreemonthsor
lesswhenpurchased.
62. Refer to Note #1 regarding Summary of Significant Accounting Policies. What does goodwill
represent?
Goodwill is the excess of the acquisition price based off of fair market value price.
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63. Refer to Note #1 regarding Summary of Significant Accounting Policies. How is insurance
premium revenue recognized?
Recognized as revenue over the term of the contract.
64. Refer to Note #2. What is Berkshires long-held acquisition strategy?
The long held acquisition strategy is to acquire businesses at sensible prices that have consistent
earning power, good returns on equity and able and honest management.
65. During the financial crisis in 2008, Berkshire Hathaway was in a strong financial position and
was therefore able to capitalize on several investment opportunities, including investing in
Goldman Sachs (GS) and General Electric (GE). In 2008, Berkshire acquired warrants to
purchase 43,478,260 shares of common stock of GS at $115/share.
The GS Warrants were exercisable for an aggregate cost of $5 billion ($115/share). Did Berkshire
exercise the warrants? At what price is GS trading today? Refer to page 17 in the annual reportCalculate the percentage in value that GS increased since Berkshires acquisition in 2013.
http://www.reuters.com/article/2013/03/26/us-goldmansachs-berkshireidUSBRE92P0K820130326
http://www.bloomberg.com/news/2013-10-01/berkshire-exercises-goldman-warrant-to-get-2-1billion-stake.html
66. Refer to Note #8. What was the net amount of receivables of insurance and other businesses at
12/31/14? Does the net amount agree to the Balance Sheet? What was the amount of the
allowances for uncollectible accounts at 12/31/14 for receivables of insurance and other
businesses? Define allowance for uncollectible accounts.
67. Refer to Note #9. What are the components of inventory at 12/31/14?
Raw materials, work in process and other, Finished manufactured goods, and goods acquired for
resale.
68. Refer to Note #19. How many shares of Class B are equal to one share of Class A common
stock? 10,000 shares of Class B are equal to one share of Class A common stock.
69. Refer to Managements Discussion and Analysis. How are Berkshires operating businesses
managed?
Berkshires operating business is managed in a decentralized way. Berkshire allows subsidiaries to
operate themselves.
70. Refer to Managements Discussion and Analysis. What does General RE sell? What is
Reinsurance?
General RE sells life and health insurance. Reinsurance is when one insurance company buys
insurances from another insurance company in order to mitigate risk.
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71. Refer to Managements Discussion and Analysis. What major events in 2014, 2013 and 2012
resulted in catastrophe losses for Berkshire Hathaway Reinsurance Group? What were the
amounts of the losses?
Hurricane Sandy caused $1.1 billion in losses.
In 2013 pre tax losses of $436 million in two European catastrophes.
72. Refer to Managements Discussion and Analysis. What businesses are included in the retailing
operations?
Four home furnishing businesses, three jewelry stores, Sees candies, Pampered Chef, and OTC.

73. Refer to Owner-Related Business Principles #7. What financial calculus do Charlie and
Warren employ? What does Warren believe should never be risked?
Warren believes that what your family has and needs should never be risked for what your family
doesnt have and doesnt need.
74. Refer to Owner-Related Business Principles #13. What is Warren Buffett unwilling to talk
about? Who, in Warrens opinion, is the greatest teacher in the history of finance? What books did
he write?
Warren is unwilling to talk about specific stocks. Benjamin graham is the greatest teacher in the
history of finance in Warrens opinion. He wrote the book The Intelligent Investor.
75. What is Warrens succession plan? Why is Methuselahs record in jeopardy?
76. Refer to the list of Operating Companies on page 125. With which companies have you
personally transacted business? (Note: there is no correct answer to this question)
Russell, Heinz, Sees Candies, Kirby, BNSF
77. On which stock exchange is Berkshire Hathaway traded? What are the trading symbols (ticker
symbol) for Class A and Class B stock?
Berkshire Hathaway is traded on the New York Stock Exchange.
Class A---- BRK-A
Class B---- BRK-B
78. Information on Berkshire Hathaways recent stock price can be found at
http://finance.yahoo.com on the left-hand side of the page, in the blank that says Get Quote,
type Berkshire Hathaways ticker symbol.
Record Berkshire Hathaways latest stock price for Class A $196,899.00
as of (date): 10/14/2015
Record Berkshire Hathaways latest stock price for Class B $ 131.18
as of (date): 10/14/2015
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What is the ratio of Class B to Class A?

1/1500

(See Note 19 of the annual report)

How many shares of stock does Berkshire Hathaway have

outstanding? Refer to Note #19.
Calculate Berkshire Hathaways market cap.
(Market cap. refers to the market capitalization or the total
market value of the company.) Show your calculations below:

Class A
Class B

826,339
shares
1,224,855,488 shares

$__324.39____ billion

79. What is the listed P/E ratio for BRKA? 18.02

What is the meaning of the P/E ratio? Market price per share/annual earnings per share
VII. Refer to the 10-K on the SECs website www.sec.gov to answer the following questions:
80. What are the first 8 Items titled in the 10K?
Item 1.
Business
Item 1A.
Risk Factors
Item 1B.
Unresolved Staff Comments
Item 2.
Description of Properties
Item 3.
Legal Proceedings
Item 4.
Mine Safety Disclosures
Item 5.
Market for Registrants Common Equity, Related Security Holder
Matters and Issuer Purchases of Equity Securities
Item 6.
Selected Financial Data
Item 7.
Managements Discussion and Analysis of Financial Condition and
Results of Operations
Item 7A.
Quantitative and Qualitative Disclosures about Market Risk
Item 8.
Financial Statements and Supplementary Data

81. Refer to the Item 1 in the 10K. What is TRIA and what is its purpose?
TRIA is the Terrorism Risk Insurance Act which provides insurers with federal reassurances for
losses caused by terrorism.
82. Refer to the Item 1A in the 10K. Who makes the major investment decisions and the major
capital allocation decisions? What are their positions?
These decisions are made by Warren Buffet in consultation with Charlie Munger. Warren in
Chairman and CEO. Charlie is Vice- Chairman.

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83. Refer to the Item 7 in the 10K. Who is responsible for the day-to-day business activities of the
operating businesses? What does Berkshires corporate office management do?
The senior corporate management team is responsible for capital allocation decisions, selection of
CEO, and investment activities. No one is responsible for day to day to business activities of the
operating businesses.
84. Compare the Income Statement and the Balance Sheet in the 10K to the Annual
Report. Are there any differences?

85. How would you characterize the difference between the Annual Report and the 10-K?
The annual Report encompasses the 10K and focuses on the comments and analysis provided by
the company.
86. Based on this assignment and your analysis, would you recommend purchasing Berkshire
Hathaway stock (Class A or B)? Why or Why not? List two pieces of financial advice you
obtained from this assignment.
I would recommend purchasing Berkshire Hathaway stock because of P/E ratio.
1) Do not invest in something because it is cheap; instead aim for great businesses at a fair
price.
2) Do not use pre-tax earnings as a valuation tool.
87. Recommended but not required: For those of you who would like more insight from Warren
and Charlie, I highly recommend that you read the pages in the annual report referred to below.
Per Buffett, Fifty years ago, todays management took charge at Berkshire. For this Golden Anniversary,
Warren Buffett and Charlie Munger each wrote his views of what has happened at Berkshire during the past 50
years and what each expects during the next 50. Neither changed a word of his commentary after reading what the
other had written. Warrens thoughts begin on page 24 and Charlies on page 39. Shareholders, particularly new
ones, may find it useful to read those letters before reading the report on 2014...

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