Glossary
Balance Sheet
One of the three main financial statements: a snapshot of everything a company owns and everything it owes, on a single date.
The income statement covers a stretch of time and the balance sheet covers an instant. It lists assets on one side, liabilities on the other, and the difference between them, which is shareholder equity. The two sides balance by construction, and that is where the name comes from.
It is where the debt is, and where the cash is, which is why it is the statement people open to ask whether a company could survive a bad year rather than how a good one went. The debt-to-equity figure on a company page comes straight out of it, as does the cash a company has on hand.
Being a snapshot is its main limitation. A balance sheet dated December 31 says nothing about what those balances did in November, and a company can look different on the last day of a quarter than it did through the middle of it. Four of these are published a year, three in the 10-Q filings and the audited one in the 10-K.
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Related terms
- Debt-to-Equity RatioHow much a company owes compared with what shareholders own, where a ratio of 1 means the two are equal.
- 10-KThe annual report a US public company files with the SEC, holding its audited financial statements and its own list of what could go wrong.
- 10-QThe quarterly report a US public company files with the SEC, covering three months and lighter than the annual 10-K.
- Free Cash FlowThe cash a company has left from operations after paying for the equipment and property it needs to keep running.
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