Balance Sheet

A company’s assets, liabilities, and shareholders’ equity are listed on its balance sheet, which is a financial statement. The balance sheet of a firm is essential for analysts to analyze its capital structure and for investors to compute their returns.

Multiple ratios, such as the debt-to-equity ratio and the acid-test ratio, can be calculated from a balance sheet to give investors insight into a business’s financial health. Considerable more information can be gleaned from the balance sheet’s references in the income statement and the statement of cash flows, as well as any notes or appendices included in an earnings report.