Financial statements · updated October 21, 2026
What is a company's balance sheet and how do you read it
The balance sheet shows, on a given date, everything the company owns (assets), everything it owes (liabilities) and what is left for shareholders (equity). It is like a snapshot of the company on one day: the cash in the bank, the buildings, the inventory, the loans and the bills still to pay.
The balance sheet formula
- Assets
- Everything the company owns: cash, money owed by customers, inventory, buildings, machines, brands it bought.
- Liabilities
- Everything it has to pay: loans, bonds, suppliers, wages, taxes.
- Shareholders' equity
- What is left for shareholders after subtracting liabilities from assets. Also called book value.
Worked example
A company has $50 billion in assets and $30 billion in liabilities.
If the company sold all its assets at balance sheet value and paid off its debts, shareholders would be left with $20 billion.
Worth knowing
The balance sheet always has two equal sides: what the company owns, and where the money for it came from (debt or shareholders). Debt to equity, the current ratio and book value are all calculated from it.
When the balance sheet can fool you
Old values: buildings and land sit on the balance sheet at their purchase price minus depreciation, not at what they are worth today. What is missing: the brand, the people and software built in-house usually do not appear, even though they can be worth more than everything else. One single day: the balance sheet shows the position at quarter end; a company can arrange its cash for exactly that day.
Related terms
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Questions about the balance sheet
Where do I find a company's balance sheet?
In the annual report and the quarterly reports, published on the company's investor relations website. On our stock pages you find the main figures under Financials.
What is the difference between the balance sheet and the income statement?
The balance sheet shows the position on one day. The income statement shows what happened over a period: how much the company sold and how much it earned.
These explanations are for information only. They are not a recommendation to buy or sell.
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