Download Preston's 1 page checklist for finding great stock picks: http://buffettsbooks.com/checklist Preston Pysh is the #1 selling Amazon author of two books on Warren Buffett. The books can be found at the following location: http://www.amazon.com/gp/product/0982... http://www.amazon.com/gp/product/1939... In lesson three, we explored the importance of a Balance Sheet. We learned that current assets and liabilities are income streams and obligations, respectively, that a company will receive or pay during the next 12 months. We also learned that the equity of a business was equal to the total assets minus the total liabilities. After determining a company's equity, we can use that important number to determine the margin of safety that's associated with buying a business.