Balance Sheet

One of the three financial statements, provides a snapshot of the company’s assets and liabilities at the Balance Date, FY end.

The Balance Sheet is one of the three financial statements, when combined make up the Company’s Accounts, which provides details about a company’s business and reports the financial performance. The Balance Sheet is an accounting statement and gives a picture of a company’s assets and liabilities at a specific point in time. This is typically at the end of the Financial Year, but it does not have to be. It could be a shorter period, possibly monthly. The Balance Sheet is the basis for computing rates of return for investors, ROA and ROE and evaluating a company’s capital structure and what shareholders have invested in.

The Balance Sheet is the record of the company’s assets, what the company owns and the liabilities, what the company owes. Liabilities can then be further broken down into liabilities or creditors and shareholders. The distinction here is that creditors are assuming the financial risk of the company. Creditors are in a senior position in a situation of insolvency, compared to shareholders who assume the company’s business risk. Finally, as the name suggests, the Balance Sheet must balance, meaning Total Asset must equal Total Liabilities.