The balance sheet is a snapshot of a company’s net worth. It is sometimes referred to as a statement of financial position. In the most simplified terms, a company’s balance sheet gives an accounting of what a company owns (its assets), what it owes (its liabilities), and the amount of capital that the company receives from its shareholders.
A balance sheet is only as accurate as the period of time it is measuring. To that end, investors should be careful to look at several balance sheets over different period of times to look for patterns that can help determine trends or patterns.