What Is a Balance Sheet?

A balance sheet is a financial statement that shows a company's assets, liabilities, and
shareholder equity at a given point in time. Balance sheets serve as the foundation for calculating
investor rates of return and assessing a company's capital structure. In a nutshell, a balance sheet
is a financial statement that shows what a firm owns and owes, as well as the amount of money
invested by shareholders. Balance sheets, together with other significant financial data, can be
used to undertake fundamental analysis or calculate financial ratios.

IMPORTANT TAKEAWAYS
- A balance sheet is a financial statement that shows the assets, liabilities, and shareholder
equity of a corporation.
- The balance sheet is one of three key financial statements used to assess a company.
- It gives a glimpse of a company's finances (what it owns and owes) as of the publishing
date.
- The balance sheet is based on an equation that compares assets to the total of liabilities
and shareholder equity.
- Financial ratios are calculated using balance sheets by fundamental analysts.