Balance sheet (redirected from balance)

Balance sheet

Also called the statement of financial condition, it is a summary of a company's assets, liabilities, and owners' equity.

---

balance sheet

The financial statement of a business or institution that lists the assets, debts, and owners' investment as of a specific date. Assets are ordered according to how soon they will be converted into cash, and debts according to how soon they must be paid. Because balance sheets do not list items at their current monetary value, they may greatly overstate or understate the real value of certain corporate assets and liabilities. Also called statement of financial condition, statement of financial position. See also consolidated balance sheet.

---

Balance sheet. A balance sheet is a statement of a company's financial position at a particular moment in time. This financial report shows the two sides of a company's financial situation -- what it owns and what it owes.

What the company owns, called its assets, is always equal to the combined value of what the company owes, called its liabilities, and the value of its shareholders' equity. Expressed as an equation, a company's balance sheets shows assets = liabilities + shareholder value.

If the company were to dissolve, then its debts would be paid, and any assets that remained would be distributed to the shareholders as their equity. Bankruptcy occurs in situations where there is nothing left to distribute to the shareholders, and the company balance sheet is in fact unbalanced because the company owes more than it owns.