Business Dictionary
Balance Sheet
Definition
A financial statement that reports a company's assets, liabilities, and shareholders' equity at a specific point in time.
Deep Dive
The Balance Sheet is one of the three core financial statements, providing a snapshot of a company's financial position at a specific point in time. It adheres to the fundamental accounting equation: Assets = Liabilities + Shareholders' Equity. This equation must always balance, hence the name, and it comprehensively details what a company owns (assets), what it owes (liabilities), and the residual value belonging to its owners (equity).
Examples & Use Cases
- 1A startup's balance sheet showing $75,000 in cash, $30,000 in outstanding supplier payments (liabilities), and $45,000 in owner's equity at the end of the fiscal quarter.
- 2A large public corporation's annual balance sheet detailing billions in real estate, machinery, long-term debt, and retained earnings.
- 3An investor analyzing a company's balance sheet to determine if it has sufficient current assets to cover its short-term liabilities, indicating good liquidity.
Related Terms
Financial StatementAssetsLiabilitiesEquityAccounting Equation