The financial statement that reports a company's assets, liabilities, and shareholders' equity at a specific date is the balance sheet.
A balance sheet presents a snapshot of a company's financial position. Its central accounting relationship is assets equal liabilities plus shareholders' equity. Assets are resources such as cash, inventory, property, and receivables. Liabilities are obligations such as loans, accounts payable, and bonds. Equity represents the residual interest after liabilities are subtracted from assets.
Unlike an income statement, which covers revenue and expenses over a period, a balance sheet is prepared as of a particular date. Investors use it to examine factors such as cash holdings, debt, working capital, and the relationship between borrowed funds and owners' capital.
The balance sheet does not by itself show a company's market value or guarantee financial strength. Accounting rules may record some assets at historical cost, and intangible assets can be difficult to assess. Analysts normally read it alongside the income statement, cash flow statement, and notes to the accounts.