In the balance sheet, the liabilities and assets of the enterprise will be listed. Liabilities include short-term liabilities and long-term liabilities, and assets include current assets and non-current assets. The main function of the balance sheet is to reflect the financial status and liabilities of the enterprise, as well as the asset allocation and use of the enterprise.
An enterprise with high asset-liability ratio usually means high financial risk, because the enterprise has relatively large debts and heavy financial burden, which may make it difficult for the enterprise to repay its debts and even face the risk of bankruptcy.
On the contrary, enterprises with low asset-liability ratio usually mean that their financial situation is better, because their liabilities are relatively small and their financial burden is lighter, so they can use more funds for their development and expansion.
Therefore, the asset-liability ratio is one of the important indicators to measure the financial health of enterprises, and enterprises should pay attention to and control their own debt level to ensure the controllability and sustainability of their financial risks.