What Is A Balance Sheet (BS)?

A balance sheet is one of the three financial statements that are used to value a company and to show what it owns or owes. The Balance Sheet lists all assets, liabilities and shareholder's equity attributed to the company. It is always a snapshot of one point in time. The Balance Sheet is split into three sections:

  • Assets - what the company owns or is owed
  • Liabilities - any money the company may owe
  • Shareholder's Equity - what the shareholders own

One of the most fundamental rules of accounting and finance is that a balance sheet MUST balance (hence the name). Assets will always be equal to Liabilities + Shareholder's Equity. It is often possible to get a basic understanding of how a company is funded just by looking at the balance sheet. For example, if Long Term Debt and PP&E are both rising every year, it is reasonable to assume that the company is borrowing long-term money in order to finance investments in PP&E. Similarly, if the short term debt is fluctuating along with inventory then it is probable that the company is borrowing to pay suppliers (which it would do if the borrowing rate was very low and it could earn more by investing its cash, and if the company received payment for products before it had to pay back the loans). A Balance Sheet is constructed either by pulling information and figures directly from a company's filings or by using the Cash Flow Statement and Income Statement to tie back into the Balance Sheet.

To learn more about this concept and become a master at Financial Statement modeling, you should check out our FSM Modeling Course. Learn more here. 

Module 1: Getting Started

Module 2: Fundamental Concepts

Module 3: The Income Statement

Module 4: Working Capital

Module 5: PP&E and Intangibles

Module 6: The Cash Flow Statement

Module 7: Debt & Interest Schedule

Module 8: Finishing Your Model

Module 9: Bonus

Learn More Here

Related Terms

Return to the Finance Dictionary

Read Forum Topics About Balance Sheet (BS)

 

Start Discussion

Popular Content See all

Why aren't Asians/Indians/Middle Eastern considered diversity
+40IBby Intern in Investment Banking - Industry/Coverage">Intern in IB - Ind
The "right" blue in excel
+24REby Portfolio Manager in Real Estate - Commercial">PM in RE - Comm
Chose Evercore over GS & MS for Full Time - Did I make the right choice?
+21IBby Prospective Monkey in Investment Banking - Mergers and Acquisitions">Prospect in IB-M&A
Do I Count as Diversity?
+19IBby Prospective Monkey in Investment Banking - Mergers and Acquisitions">Prospect in IB-M&A
Leaving New York
+16IBby Intern in Investment Banking - Industry/Coverage">Intern in IB - Ind
Meeting Girls Right Now?
+15OFFby Vice President in Investment Banking - Generalist">VP in IB - Gen

Total Avg Compensation

October 2020 Investment Banking

  • Director/MD (18) $713
  • Vice President (50) $328
  • Associates (265) $228
  • 3rd+ Year Analyst (37) $166
  • 2nd Year Analyst (147) $159
  • Intern/Summer Associate (137) $141
  • 1st Year Analyst (585) $130
  • Intern/Summer Analyst (562) $82

Leaderboard See all

1
LonLonMilk's picture
LonLonMilk
98.4
2
Jamoldo's picture
Jamoldo
98.3
3
Secyh62's picture
Secyh62
98.2
4
CompBanker's picture
CompBanker
97.9
5
redever's picture
redever
97.8
6
Addinator's picture
Addinator
97.6
7
bolo up's picture
bolo up
97.5
8
NuckFuts's picture
NuckFuts
97.5
9
frgna's picture
frgna
97.5
10
Edifice's picture
Edifice
97.3