Balance Sheet Definition & How to Use It

The balance sheet is one of the most important financial statements for a business, providing a snapshot of the company’s financial position at a specific point in time. The balance sheet details a company’s assets, or what it owns, as well as its liabilities, or what it owes. It reflects the cumulative effect of all the company’s transactions since the day the business started, which is why it’s sometimes called the statement of financial position. The balance sheet highlights whether a business is using its resources efficiently or taking on too much debt, delivering essential information about the company’s long-term financial soundness and resilience, while also letting shareholders know what their investment in the business is currently worth.

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