What Is a Balance Sheet

A Bilanz Hattingen is a financial statement that provides a snapshot of the company’s finances (what it owns and what it owes) at a specific point in time. It adheres to an equation that equates assets with the sum of liabilities and shareholder equity. Fundamental analysts use this information when calculating financial ratios, and it is also important for assessing company liquidity and overall health.

The balance sheet is one of the three main financial statements, along with the income statement and statement of cash flows, that are used to report on a company’s performance. Accountants and corporate finance teams prepare these reports, but the details contained in them are useful for many different professionals, including business owners and investors.

A company’s balance sheet shows all of the money that it owns, from cash and investments to property and equipment. It also lists all of the debts and obligations that a company has, with a section for current and long-term liabilities. Most balance sheets are organized into sections based on the type of asset or liability, with each group broken down further into sub-categories like current and non-current assets, short-term and long-term debts, and owner and shareholder equity.

Companies complete a balance sheet on a regular basis, usually once a year or less often depending on the size and age of the organization. Newer companies may find it helpful to fill out a balance sheet more frequently in order to keep better track of their growing finances. The most common format for a balance sheet includes a list of all the company’s assets on the left and then a list of all the company’s liabilities on the right. The total for each of these categories is then listed at the bottom of the report.

Generally, the first section of the balance sheet includes all of the company’s liquid assets, such as cash and investments. The next section of the balance sheet outlines all of the company’s fixed assets, such as equipment and facilities. It also includes other non-liquid assets, such as inventories and intellectual property, which are sometimes referred to as intangible assets. The final section of the balance sheet identifies all of the company’s debts and obligations, with a section for both current and long-term debt. This includes both loans from shareholders and lenders as well as any payroll or tax expenses that will be due within a year of the date of the balance sheet.

The section of the balance sheet titled “owners’ equity” includes contributed capital, preferred stock and treasury shares. It also includes retained earnings, which are the net earnings that a company reinvests in itself or distributes to shareholders. The balance sheet may also include a statement of changes in owners’ equity to identify increases and decreases in this amount over a given period. Often, these increases and decreases are reflected in the company’s quarterly or annual income statements. For this reason, the balance sheet is often viewed as the most important part of the financial statements that a company produces.

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