THE SMART BUSINESS STARTUP FOUNDER’S GUIDEBOOK: Launching, Building & Scaling Your Entrepreneurial Vision Successfully by Thoo Adrian

Author:Thoo, Adrian
Language: eng
Format: epub
Published: 2023-09-03T00:00:00+00:00

Demystifying the Balance Sheet

Financial statements contain valuable information about your company’s financial health. You might have heard of the terms balance sheet, income statement and cash flow statement. They are the 3 main reports that are most frequently used to describe the position and performance of a company. You’d find them in annual reports.

The balance sheet summarises your company’s assets, liabilities and equity. The income statement shows your expenses and revenue. Typically, you’d look at this in detail every quarter or annually.

Assets are what your company owns. Liabilities(such as loans, accounts payable and taxes) are what it owes. The portion of liabilities owed to shareholders is known as equity. Equity is the value of your company that belongs to shareholders. Mathematically, it can be expressed as:

Assets = Liabilities + Equity Equation 1

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