Balance sheet

What is balance sheet?

A balance sheet is a financial statement showing what a company owns (assets), what it owes (liabilities), and the owners' stake (equity) at a single point in time. It's built on the accounting equation, so assets always equal liabilities plus equity. It's a snapshot of financial position, not a period of activity.

Why it matters for fast-growing companies

Lenders and investors read the balance sheet to judge solvency, can you cover what you owe, and how much cushion is left. It's also where working capital, debt levels, and cash sit, so it drives decisions about fundraising, credit lines, and whether growth is outrunning your balance sheet.

Related terms

• Accounting & closeAccounting equationThe accounting equation states that a company's assets always equal its liabilities plus owner's equity.
• Accounting & closeIncome statement (P&L)An income statement, also called a P&L, reports a company's revenue, expenses, and resulting profit or loss over a period of time, a month, quarter, or year.
• Accounting & closeCash flow statementA cash flow statement tracks the actual cash moving into and out of a business over a period, grouped into operating, investing, and financing activities.
• Accounting & closeRetained earningsRetained earnings are the cumulative profits a company has kept rather than paid out to owners as dividends or distributions.

Frequently asked questions