4 The balance sheet

‘We tend to focus on assets and forget about debts.’

Suze Orman, financial adviser, author and American media personality

In a nutshell

The balance sheet (or statement of financial position) is one of the key financial statements prepared by a company. It shows a company’s financial position at a point in time.

Values are attributed to every asset and every liability to give a net overall position or net worth of a business.

Need to know

It is useful to think of the balance sheet as a snapshot of the business’s assets and liabilities. It is a static document and a business should take repeated snapshots at fixed intervals (usually annually and also more frequently) if it wishes to see how the assets and liabilities change ...

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