The balance sheet provides important indicators about the financial health and operation of enterprises by displaying information such as assets, liabilities and owners' equity. The balance sheet mainly includes assets, liabilities and owners' equity, in which assets refer to resources with economic value owned by enterprises. Assets are divided into two categories: long-term assets and current assets. Current assets include cash, accounts receivable and inventory, while long-term assets include fixed assets, investments and intangible assets.
Liabilities are economic obligations undertaken by enterprises. Liabilities can be divided into two categories: long-term liabilities and current liabilities. Current liabilities include accounts payable and short-term loans, while long-term liabilities include long-term loans and bonds payable. Owner's equity is also called net assets. It is the investment and accumulated rights and interests of enterprise owners or shareholders. Owner's equity equals total assets minus total liabilities.
The role of balance sheet
The balance sheet provides a general snapshot to let enterprises know their financial situation at a specific point in time. By analyzing the composition and amount of assets and liabilities, enterprises can evaluate their financial health. The balance sheet can be used as the basis for decision-making, and the management of the enterprise can evaluate the company's operating conditions according to the information in the balance sheet, and make strategic planning, budget and investment decisions.
The balance sheet can be used to monitor the operation of enterprises. For example, by comparing the balance sheet data of continuous periods, we can find the changing trend of assets and liabilities, and judge the profitability, solvency and capital status of enterprises. The balance sheet reflects the liabilities and debt tolerance of the enterprise. By evaluating the scale and type of liabilities, we can understand the debt risk and solvency faced by enterprises.
Reference to the above content: Baidu Encyclopedia-Balance Sheet