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A balance sheet is a financial statement that provides a snapshot of a company's financial position at a specific point in time. It details the company’s assets, liabilities, and shareholders' equity, following the fundamental accounting equation: Assets = Liabilities + Shareholders' Equity. The balance sheet is one of the most important financial documents used by investors, analysts, and management to assess the financial health of a business. It shows what the company owns and owes, as well as the amount invested by shareholders, giving insights into liquidity, solvency, and overall financial stability.
A company's balance sheet may show $500,000 in assets, $300,000 in liabilities, and $200,000 in shareholders' equity. This indicates the company’s resources and how they are financed.
• A key financial statement showing assets, liabilities, and equity.
• Used to assess financial health, liquidity, and solvency.
• Follows the accounting equation: Assets = Liabilities + Shareholders' Equity.
It provides a detailed view of a company’s financial position, helping stakeholders make informed decisions.
It shows the company’s assets, liabilities, and shareholders' equity at a specific point in time.
Typically, balance sheets are prepared at the end of each accounting period, such as quarterly or annually.
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