Finance 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 primary financial statements, offering a snapshot of a company's financial position at a specific point in time. It meticulously lists what a company owns (assets), what it owes (liabilities), and the residual value belonging to its owners (shareholders' equity). The fundamental accounting equation, Assets = Liabilities + Shareholders' Equity, always holds true, providing a foundational framework for understanding the company's financial structure and its sources of funding.
Examples & Use Cases
- 1A company's balance sheet dated December 31, 2023, shows its cash on hand, inventory value, long-term debt, and total shareholder investment specifically on that exact date.
- 2An investor reviews a company's balance sheet to determine if it has too much debt relative to its equity, or if its current assets are sufficient to cover its current liabilities, before making an investment decision.
Related Terms
Income StatementCash Flow StatementAccounting EquationAssetsLiabilitiesEquity