Mary Buffett isn’t even Warren Buffett’s ex-wife. She’s his son’s ex-wife, which seems a little removed for someone who pretends to know the secrets of the Oracle of Omaha. But her recent book, Warren Buffett and the Interpretation of Financial Statements: The Search for the Company with a Durable Competitive Advantage, is worth reading. The title is an allusion to Benjamin Graham’s Interpretation of Financial Statements, and it remains true to its namesake by presenting investment advice in compact form.

That said, the format of the book may be a little daunting for those of us who skipped accounting in college (myself included). It’s a fantastic, beginner’s guide to accounting, if that’s what you’re looking for.

If, instead, you’re looking for quick advice to help you rejigger your portfolio in the midst of our current economic apocalypse, you may want to just pop the following into your stock screen:

PE < 40
Gross Profit Margin > 40%
Book Value of Equity / Net Earnings > 20%
Liabilities / Book Value of Equity < 0.8%

OK, so now you have a bunch of companies to look for. One of the important lessons from Mary Buffett’s book is that, after the screen, the hard work begins. Mary Buffett suggests you analyze each of these companies financial statements from the past 10 years. What you want to see, as you review the financial statements from the past 10 years, is that the company consistently meets the following standards:

SG&A < 40% gross profits
Depreciation < 10% gross profits
Interest payments < 15% gross profits
R&D expense = low to none
Earnings per share = upward trend (here you want growth and not a lot of variation)
Top heavy assets (assets at the top of the balance sheet — like cash and inventory — are easy to liquidate, so they give the company a quick source of cash when necessary
Bottom heavy liabilities (borrowings at the bottom of the balance sheet aren’t owed for a long time, so the company can float on the cheap capital for a while)
Little or no long term debt
Capex / net earnings < 50% (and preferably 25%)
5 year retained earnings growth > 10%

This last one is the gold standard, and that’s important because you’re not likely to find any companies that meet all of the above standards. Don’t compromise on retained earnings growth, though, because this is the money that the company keeps shoving in the bank, year after year, to prepare for growth. If growth never comes, you’re looking at a big distribution (a la Microsoft).

So where do you go looking for financial statements for the past 10 years? MSN money is Mary Buffett’s recommendation, and I largely agree. While it’s not as ajaxy as Google Finance, and sometimes, on key metrics such as R&D expense, it is not as accurate as Yahoo Finance, MSN Money goes back the furthest in time.

The hard lesson of the book is that there are no quick answers in investing. You’ve got to put in your time and dig through the numbers, and a good screen will only get you so far. For those of us who can’t stand looking at Financial Statements, the consolation is that, once you pick a good company, it becomes (in Buffett parlance) an equity bond: a holding that throws off so much cash that you’ll never need to sell. The better you are at selecting these “equity bonds” the less time you’ll spend in the future trying to identify them. Then again, you might, like Warren, get a twisted joy out of financial statements. “Some men read Playboy,” Buffett recently said, “I read annual reports.” Actually Warren, no one reads Playboy.

(As a corollary to this article, I recently added a piece on Buffett’s lesser-known mentor, Philip Fisher)