Balance Sheet

Balance Sheet

Knowledge > Accounting > Balance Sheet

The balance sheet is one of the three financial statements that businesses use to assess their financial health. It provides a snapshot of a company’s assets, liabilities, and shareholder’s equity at a given point in time.

The balance sheet is an important tool for investors and creditors to assess a company’s financial strength and stability. It can also be used to assess the riskiness of a company’s business model.

A company’s Assets are everything it owns and can use to generate revenue. This includes cash and investments, inventory, accounts receivable, property, plant, and equipment.

Liabilities are everything a company owes to others. This includes accounts payable, deferred tax liabilities, and long-term debt.

Shareholders’ equity is the portion of a company’s assets that are owned by its shareholders. It represents the residual value of a company after liabilities are paid off.

The balance sheet can be used to assess a company’s financial strength and stability. A strong balance sheet means that a company has the ability to meet its financial obligations. A weak balance sheet may indicate that a company is at risk of defaulting on its debt payments or that it may have difficulty paying its bills in the future.

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