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Basics of Stock Investing

Balance Sheet

Previously we have discussed the income statement & its components. In this unit, we will discuss balance sheet. 

 

A Balance Sheet highlights the financial condition of a company. It offers a snapshot of the company's health. It tells us how much a company owns (assets) and how much it owes (liabilities) at a particular period of time. The difference between what it owns and what it owes is its equity, also commonly called "net assets" or "shareholders equity".

 

The balance sheet is named by the fact that it represents a business' financial structure balances in the following manner:

 

Assets = Liabilities + Shareholders' Equity

 

 

A balance sheet of a company provides the users of financial statements with a lot of critical information. This information must be carefully drawn to various conclusions about the financial health of a company. Understanding and analysing the balance sheet data is an integral part of financial analysis as a whole.

 

A sample Balance sheet of XYZ Company:

 

 

Click here to see the Balance Sheet of a company.

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