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Balance Sheet

Beginner
12 min

What is Balance Sheet?

A Balance Sheet shows a company's assets, liabilities, and equity at a specific point in time.

Key Components:

  • Assets = Liabilities + Equity
  • Snapshot at a date
  • Shows financial health
  • Used by investors and creditors

Why it matters

Financial Health

Evaluate if assets > liabilities

Investment

Assess company value

Lending

Banks check balance sheets

Track Growth

Compare over time

Key Concepts

Assets

What company owns

Example: Cash, inventory, buildings...

Liabilities

What company owes

Example: Loans, payables...

Equity

Owner's stake

Example: Shareholder capital...

Equation

Assets = Liabilities + Equity

Example: ₹300k = ₹150k + ₹150k...

How to use

1

List assets

Total all assets

2

List liabilities

Total all debts

3

Calculate equity

Assets - Liabilities

4

Verify balance

Check equation

Example

Goal: Create balance sheet
Assets: ₹300k
Liabilities: ₹150k
Equity: ₹150k
Check: ₹300k = ₹150k + ₹150k
Result: Balance sheet balances correctly

Pro Tips

  • •Check the date: Snapshot at specific date
  • •Compare over time: Look at trends
  • •Calculate ratios: Current ratio, debt-to-equity

Practice

Create a balance sheet using sample financial data and calculate debt-to-equity ratio
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