CHAPTER ONEThe Balance Sheet
The balance sheet is a representation of the company’s financial health. It is presented at a specific point in time, usually the end of the fiscal (accounting) period, which could be a year, a quarter, or a month. It lists the assets that the company owns and the liabilities that the company owes to others; the difference between the two represents the ownership position (stockholders’ equity).
More specifically, the balance sheet tells us about the company’s:
Liquidity. The company’s ability to meet its current obligations.
Financial health. The company’s ability to meet its obligations over the longer term; this ...
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