Balance Sheet: A Snapshot of a Company’s Financial Health

A balance sheet is a financial statement that offers a snapshot of the assets, liabilities and shareholder equity held by a company at a particular moment in time. It provides a detailed overview of what a company owns, how much it owes in debt and other charges, and the value of the equity shares held by the company’s shareholders.

A typical corporate balance sheet first lists all the assets that a company owns at a specific point. Examples of assets include cash on hand and property owned by the company. The next section of the balance sheet details all the liabilities that a company might have including long-term debt and accounts payable amounts. The last portion of the balance sheet contains information on the shareholder equity. This is an amount that is calculated by subtracting a company’s total liabilities from its assets.

Though all balance sheets list assets, liabilities and shareholder equity, the manner in which the data is entered and presented can vary by region, by industry and even by company. Balance sheets can range from the fairly simple and straightforward to highly complex and hard to understand depending on the size of the company and the nature of its business. A balance sheet typically provides vital strategic planning information for bankers, creditors and shareholders.

To learn more about balance sheets and how to prepare them, contact the financial professionals at management consulting firm, The Carleton Group in Moorpark, California.