What is "Balance Sheet" meaning?

A balance sheet is one of the key financial statements used by businesses to assess their financial health. It lists the company’s assets, liabilities, and shareholders' equity at a specific point in time. This helps stakeholders understand the company’s liquidity, operational efficiency, and financial structure.

Example

“Before approving the loan, the bank requested a balance sheet to review the company’s current assets and liabilities.”

How is "Balance Sheet" used in business?

In business, a balance sheet is used to analyze a company’s financial position. It helps investors, managers, and creditors assess the company’s ability to meet its obligations and manage resources effectively. Understanding the balance sheet is crucial for making informed financial decisions.

Pro Tip

Regularly review your balance sheet to track changes in assets and liabilities. This can help identify financial trends, improve budgeting, and ensure long-term sustainability.

Related Terms

Assets, Liabilities, Equity, Income Statement