Warren Buffett uses several key tenets in the areas of business, management, financial measure and value, to guide his value investing.Within the business tenet, Buffett restricts his efforts to businesses he can understand and analyze. He believes a deep understanding of how a business operates is required to make a viable forecast of its performance. He analyzes the business, not the market, economy or investor sentiment. Then he looks for consistent operating history to determine if the business has favorable long-term prospects. Buffett asks if management is rational—is it wise when it comes to retaining earnings or paying dividends? Does management admit to mistakes, and does it resist the lust for activity and the urge to copy its competitors? Buffett focuses on return on equity, not on earnings per share. He prefers low-leverage companies and those with high profit margins. He looks at a company’s ability to generate cash for shareholders. And he uses a one-dollar premise, which asks the market value of a dollar assigned to each dollar of retained earnings. Finally, Buffett estimates a company’s intrinsic value by projecting future earnings, then discounting them back to the present using the risk-free rate. He also favors companies that have a clear advantage and are protected against incursions from competitors. Importantly, Buffett remains open to adapting his investing style to the current environment.