Definition
Balance Sheet (Financial Statement)
The balance sheet is a financial statement showing a company's assets, liabilities and shareholders' equity at a point in time, reflecting what it owns and owes.
Built on the identity assets equal liabilities plus equity, the balance sheet is a snapshot rather than a flow statement. Indian companies present it as per Schedule III of the Companies Act, classifying items into current and non-current.
Analysts use the balance sheet to assess leverage, liquidity and asset quality. Under Ind AS, items such as financial instruments and leases are measured differently than under the older Indian GAAP, so comparability across periods of transition needs care.
Related terms
- Working CapitalWorking capital is the money a company needs to fund day-to-day operations, calculated as current assets minus current liabilities.
- Profit and Loss StatementThe profit and loss statement, or income statement, reports a company's revenues, expenses and resulting profit or loss over a period.
- Cash Flow StatementThe cash flow statement reconciles a company's profit to its actual cash movements, split into operating, investing and financing activities.
- Shareholders' EquityShareholders' equity is the residual interest in a company's assets after deducting liabilities, comprising share capital, reserves and retained earnings.
Plain-English explainer from The Dispatch Investors Encyclopedia. General information, not financial advice.