What is the Balance Sheet?

The Balance Sheet is a way of showing what a company owns and owes. It is snapshot of a company's financial condition at a single point in time. It has three parts, they are of the following:

  • Assets
  • Liabilities
  • Shareholders' Equity

Assets are things that the company has or can use to make money, such as cash, inventory, buildings, machines, etc. Liabilities are things that the company owes to others, such as loans, bills, salaries, taxes, etc. Shareholders' Equity is the difference between Assets and Liabilities, and it represents the value of the company that belongs to the owners or shareholders.

Assets are listed in order of liquidity followed by Liabilities. Shareholders' Equity is also known as Total Equity or Book Value. The Balance Sheet will tell us whether the company will survive a recession. We are looking for a "Fortress Balance Sheet".


Ratios and Equations



Balance Sheet for Johnson & Johnson (JNJ)

Balance Sheet
Source: Google Finance