$ qubo learn fundamentals/02

Balance sheet: what a company owns and owes

The balance sheet is a snapshot at one date. It lists what a company owns (assets), what it owes (liabilities) and the difference, which belongs to shareholders (equity).

It always balances: assets equal liabilities plus equity. Assets include cash, receivables, inventory, buildings and intangible items. Liabilities include supplier bills, debt and other obligations.

Two quick reads are useful. Net cash or net debt: cash minus total debt, which shows financial flexibility. The current ratio: short-term assets divided by short-term liabilities, which shows whether the next 12 months of bills are covered.

A balance sheet does not say whether a company is a good investment. It says how solid its financial base is and how much room it has if business slows.

// rule to remember

// your turn

On a stock page, find cash and total debt and calculate net cash or net debt.

Educational content only. Not investment advice. Past data does not predict future results. Risk disclosure