24 Hour Loans glossary of financial terms

Balance Sheet

A balance sheet is a formal way of recording and showing the financial situation of a particular company. It is generally used as a financial statement to show how much the company is worth at the end of an accounting/financial year. It is not concerned with profit and loss as such but is used to give a clear and simple summary picture of where the company stands financially at this given point in time.

A typical balance sheet will list both assets and liabilities. Assets are laid out on the left hand side of the balance sheet and liabilities are laid out on the right. The point here is to achieve a ?balance?. The balance sheet will also list relevant details of the actual ownership of the company. The simple picture that a balance sheet will give about a company means that it can be used as a valuable tool to show how credit worthy the company is.