Glossary · Defined term
Balance sheet
A balance sheet is a financial statement showing what a company owns, owes, and what is left for shareholders at a point in time.
Last updated Oct 2, 2026
What it means
A balance sheet is one of the three core financial statements, and it shows what a company owns, what it owes, and what is left over for shareholders at a single point in time. It follows a simple identity: assets equal liabilities plus shareholders' equity. Every dollar of assets was funded either by borrowing or by shareholders.
Assets are listed roughly in order of liquidity, from cash down through receivables, inventory, and long-term items like property and equipment. Liabilities run from short-term obligations such as accounts payable up to long-term debt. The equity section shows the residual claim belonging to shareholders. Public companies publish balance sheets in their quarterly 10-Q and annual 10-K filings.
Investors use the balance sheet to judge financial health: how much debt a company carries relative to its assets, whether it has enough liquid assets to cover near-term bills, and how the equity cushion has changed over time. A company can be profitable on its income statement yet fragile on its balance sheet if it is overloaded with debt.
An example
For illustration, a company reports $10 billion in assets and $6 billion in liabilities, leaving $4 billion of shareholders' equity. If the company later borrows another $5 billion without adding assets, equity shrinks and the balance sheet looks riskier.