Balance Sheet

A balance sheet is a financial statement that provides a snapshot of a company's financial position at a specific point in time. It details the company’s assets, liabilities, and shareholders' equity, following the fundamental accounting equation: Assets = Liabilities + Shareholders' Equity. The balance sheet is one of the most important financial documents used by investors, analysts, and management to assess the financial health of a business. It shows what the company owns and owes, as well as the amount invested by shareholders, giving insights into liquidity, solvency, and overall financial stability.

Example

A company's balance sheet may show $500,000 in assets, $300,000 in liabilities, and $200,000 in shareholders' equity. This indicates the company’s resources and how they are financed.