O'Reilly logo

The Complete Idiot's Guide to Stock Investing Fast-Track by Ken Little

Stay ahead with the world's most comprehensive technology and business learning platform.

With Safari, you learn the way you learn best. Get unlimited access to videos, live online training, learning paths, books, tutorials, and more.

Start Free Trial

No credit card required

The Balance Sheet Must Balance

The balance sheet, also known as the statement of financial position, is a snapshot of the company’s financial strength at the end of the fiscal year. The statement details what the company owns and what it owes. It does not show money flowing in or out (that’s on the statement of cash flows), but gives you a snapshot of whether this is a viable business or not.

It is called a balance sheet because it must balance. The balance is often expressed as this formula:

assets = liabilities + (shareholders) equity

or

(shareholders) equity = assets – liabilities

The three terms that make up the formula are the heart of what the balance sheet tells you about the company.

Assets: What the Company Owns

Assets represent what ...

With Safari, you learn the way you learn best. Get unlimited access to videos, live online training, learning paths, books, interactive tutorials, and more.

Start Free Trial

No credit card required