A balance sheet shows a company's financial health. It's a snapshot of assets, liabilities, and equity at a specific time.
Assets are what a company owns. They include cash, inventory, equipment, and property. Assets are divided into current and non-current.
Liabilities are what a company owes. These are debts and obligations, such as loans, accounts payable, and mortgages.
Equity represents the owners' claim after liabilities are settled. It's calculated as assets minus liabilities and includes retained earnings.
The balance sheet is divided into two sections: assets on one side, and liabilities and equity on the other. Both sides must balance.
Important ratios like the current ratio (assets/liabilities) help assess liquidity. The debt-to-equity ratio evaluates financial leverage.
Compare balance sheets over multiple periods to spot trends. Look for growth in assets, changes in liabilities, and equity fluctuations.