Examining the Balance Sheet

The balance sheet is one of several financial reports that organizations use for monitoring and planning purposes. It is a snapshot of a company’s financials on a specific date. All balance sheets include three components: assets, liabilities, and owner’s (or shareholder’s) equity. The report shows the resources an organization owns (assets), how much money it owes (liabilities), and how much equity the owners (or shareholders) have after liabilities are subtracted from the assets. 

This is also called the net worth of the company. Some of the benefits of being able to read and understand a balance sheet include making better management decisions, identifying potential financial issues before they cause bigger problems, and improving your company’s organizational efficiency.