The end-of-period snapshot
So far in our analysis, we have looked at inflows and outflows, or revenues and costs during a given period. We will now temporarily set aside this dynamic approach and place ourselves at the end of the period (rather than considering changes over a given period) and analyse the balances outstanding.
For instance, in addition to changes in net debt over a period, we also need to analyse net debt at a given point in time. Likewise, we will study here the wealth that has been accumulated up to a given point in time, rather than that generated over a period.
The balance represents a snapshot of the cumulative inflows and outflows previously generated by the business.
To summarise, we can make the following connections:
The purpose of a balance sheet is to list all the assets of a business and all of its financial resources at a given point in time.
Assets on the balance sheet comprise: ...