Investor Glossary-balance sheetInvestor Glossary-balance sheetInvestor Glossary-balance sheetInvestor Glossary-balance sheetInsightful stock market charts - Click here
investor
Categories    # A B C D E F G H I J K L M N O P Q R S T U V W X Y Z

Balance Sheet

The HTML to link to this page
 

A balance sheet is a snapshot of the financial position of a company. On the left side are the assets, and on the right side are the liabilities and owners' equity. Thus the balance sheet represents the fundamental accounting equation: Owners Equity (or Net Worth) = Assets - Liabilities (or Net Assets). The assets are listed in the order they can be converted to cash; the liabilities, in the order they must be liquidated. Thus the balance sheet shows whether the company is liquid, ie, whether it can meet its short-term obligations. The balance sheet also shows the company's leverage, ie, the ratio between capital supplied by creditors and capital supplied by owners. The balance sheet has several drawbacks, however. Some asset values on the balance sheet are historical and don't accurately reflect current values. Moreover, not all of the company's assets (like customer loyalty) and not all of its actual liabilities (like off balance sheet items) are reflected in the balance sheet. Despite these negatives, the balance sheet is a primary tool for both credit and equity analysts.



Rate this balance sheet definition...

Learn about investing with the Investor Glossary Term of the Day


Click here for insightful stock market charts. Where is the market headed? The answer may surprise you. Find out
with the exclusive & Barron's recommended charts of Chart of the Day.


Popular Terms: in escrow, balance sheet, current ratio, implied volatility, ex-dividend, APR, open position, reverse mortgage, deferred revenue, real GDP, wholly-owned subsidiary, inflation, Zero Cost Collar, Key Rate Duration, average price per share, VIX, limit order, labor relations, command economy, quality assurance, LIBOR, debt service coverage, FTSE, phantom income, 1031 exchange, ex-dividend date, per diem, stock split, stock market close, minority interest, cancelled check, covered put, dividends payable, 1035 exchange, class C shares, diluted share, required rate of return, margin rate, retained earnings, EBITDA, FICO score, 144a, deferred tax, risk management, option premium, annual return, 401a, irrevocable trust, liquidity ratio


Home | Term of the Day | Suggest a Term | Chart of the Day | Dogs of the Dow
Investor Glossary Index >>> # A B C D E F G H I J K L M N O P Q R S T U V W X Y Z A B C D E F G H I J K L M N O P Q R S T U V W X Y Z
Accounting | Banking | Bonds | Brokers | Economy | Futures | Mutual Funds | Options | Real Estate | Retirement | Stocks | Taxes | Technical Analysis
©2004-2014 Investor Glossary - All rights reserved - Terms of Use