Balance Sheet

The Balance Sheet is a companies financial picture on a given day. One side of the balance sheet totals up assets, moving from most liquid (cash) to least liquid (plant and equipment or goodwill). The other side of the balance sheet lists up liabilities in order of immediacy. Remember that assets must equal liabilities plus shareholders equity. The balance sheet, along with the income statement, is an important tool for analyzing the financial health of a company. Using only a firm's balance sheet, you can compare current assets with current liabilities to assess liquidity; you can compare debt to shareholder's equity to see how leveraged the company is; and you can get a better idea of whether the assets might include some hidden value.



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