Fundamental Glossary / Financial Statements
Balance Sheet
A statement of what the company owns and owes at a single date, and the equity that balances the two.
Formula
Assets = liabilities + shareholders' equity.
What it means
The balance sheet is a photograph on the reporting date, not a film of the year. It lists assets, liabilities, and the residual equity.
Under the accounting identity, the two sides always match. If assets grow, liabilities, equity, or both must grow with them.
How to read it
Read it beside the profit statement. Profit that does not become cash often shows up as receivables or inventory. Profit that was borrowed shows up as debt.
What to watch
A strong year-end balance sheet can be dressed for the photograph. Compare the year-end with quarterly receivables and debt if you can. Off-balance-sheet commitments sit in the notes, not on the face.
This note explains the term. It is not a research recommendation, a target price, or a comment on any security. Ratios and regulatory thresholds change; use the latest filing or circular for a live figure.