A balance sheet reports a company's assets, liabilities and shareholder equity at a specific point in time. It provides a basis for computing rates of return and evaluating the company's capital structure by showing company's resources or assets. It also shows how those assets are financed: whether through debt under liabilities or by issuing equity as shown in shareholder equity.
The balance sheet provides both investors and creditors how effectively a company's management uses its resources. Like other financial statements, the balance sheet is used to do financial analysis and to calculate financial ratios.
Updated 7 months ago