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What is a Balance Sheet?


The term balance sheet refers to a financial statement that reports a company's assets, liabilities, and shareholder equity at a specific point in time. Balance sheets provide the basis for computing rates of return for investors and evaluating a company's capital structure.


In short, a balance sheet is a financial statement that provides a snapshot of what a company owns and owes, as well as the amount invested by shareholders. Balance sheets can be used with other important financial statements to conduct fundamental analysis or calculate financial ratios.


The balance sheet adheres to the following accounting equation, with assets on one side, and liabilities plus shareholder equity on the other, balance out:


Assets = Liabilities + Shareholders’ Equity


This formula is intuitive. That's because a company has to pay for all the things it owns (assets) by either borrowing money (taking on liabilities) or taking it from investors (issuing shareholder equity).





10X Business Brokers offer expertise as Business Advisory Consultants and respected experts in the Business Broker marketplace. Kat Ramirez is currently the CEO and Founder of several businesses including adBidtise, #SocialBuzz, Golfing Buddy, and The Standout & Grow Podcast. Kat is a serial entrepreneur who loves working with business owners. 10X Business Broker is a women-owned, minority-owned, and veteran-owned business.


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