Warren Buffett：Berkshire 1977 Letter, Excerpt 3

Except for special cases (for example, companies with unusual debt-equity ratios or those with important assets carried at unrealistic balance sheet values), we believe a more appropriate measure of managerial economic performance to be return on equity capital. In 1977 our operating earnings on beginning equity capital amounted to 19%, slightly better than last year and above both our own long-term average and that of American industry in aggregate. But, while our operating earnings per share were up 37% from the year before, our beginning capital was up 24%, making the gain in earnings per share considerably less impressive than it might appear at first glance.

Source： https://www.berkshirehathaway.com/letters/1977.html
Locator：1977 Chairman's Letter, excerpt 3 · Verified：2026-10-19 · Verification：Short excerpt

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