A balance sheet is a financial statement that conveys a company’s financial position. It contains information about the company’s assets, liabilities, and shareholders’ equity at a given time. This information is used to evaluate the company’s return rates and capital structure.
A balance sheet is divided into three sections. They are as follows:
Assets are the firm’s valuable resources that can be used for future benefits. There are both tangible and intangible assets in this category.
Liabilities: These are the company’s obligations. This is the amount of money owed by the company to its stakeholders.
Owner’s equity: The net book value, or total worth of the company, is the owner’s equity.
On balance sheets, the following formula is used:
Accountants and analysts calculate financial ratios using balance sheets in conjunction with other financial statements, such as income and cash flow statements.