What is the Purpose of a Balance Sheet?

The balance sheet tells potential investors or banks, how a company is doing financially. A balance sheet is a financial snapshot of a company’s Assets, Liabilities and any Ownership equity that the company has at the stated time frame of the Balance Sheet. Assets can be cash, amounts owed to the company or large pieces of equipment they own. A liability is something that the company owes somebody else; such as a loan repayment or their accounts payable. Owners Equity is what belongs to the owners, or stockholders, once the liabilities are paid.