The balance sheet is the mother document of the three basic financial documents. It gives a picture of the company’s assets, equity and debts at a certain moment. Companies usually work by financial year and only draw up their balance sheet at the end of the financial year. In other words, they take this picture of the assets and liabilities only once a year. In this section, we introduce you to the secrets of balance sheet reading.
Do you want to start with a short warm-up? Then we advise you to spend 8 minutes of your time on the very clear video below:
In the next topics, you will be guided step by step through the balance sheet. You will learn the most important concepts, as well as the basic accounting principles related to the balance sheet. You will see, using some simple examples, that reading a balance sheet is not that difficult. You just need to get to know the language. Finally, this part concludes with two financial ratios that belong to the balance sheet: solvency and liquidity