Balance Sheet

A balance sheet is one of the three core financial statements used to evaluate a business. It provides a snapshot of what a company owns (assets), what it owes (liabilities), and the net value belonging to shareholders (equity) at a given date.

The fundamental equation is Assets = Liabilities + Equity. Current assets include cash, receivables, and inventory, while fixed assets include property and equipment. Liabilities are divided into current (due within a year) and long-term obligations like bonds payable.

Investors use balance sheets to assess financial health, liquidity, and leverage. A company with strong assets relative to liabilities is generally considered financially stable. Comparing balance sheets over time reveals trends in debt levels, cash reserves, and overall financial trajectory.