what is balance sheet

A balance sheet is a financial statement that summarizes an individuals or organizations assets, equity, and liabilities at a specific point in time. It is one of the three core financial statements used to evaluate a business, along with the income statement and cash flow statement. The balance sheet is often described as a "snapshot of a companys financial condition". It provides a summary of each and every financial statement of an organization. The balance sheet adheres to an equation that equates assets with liabilities and equity. The purpose of the balance sheet is to provide a summary of a business at a given point in time, offering critical insight into the health of a business that can be used to calculate financial ratios and evaluate a companys capital structure. A balance sheet is an important reference document for investors and stakeholders for assessing a companys financial status. It enables them to compare current assets and liabilities to determine the businesss liquidity or calculate the rate at which the company generates returns. Comparing two or more balance sheets from different points in time can also show how a business has grown.