Structure Of A Balance Sheet Essay

711 Words Oct 8th, 2015 3 Pages
Balance Sheet By definition, a balance sheet is a statement of an organization showing its financial position during a specific date or often at the end of every year. As such, it analyzes the assets, credits, and equity of the business to give the manager an overview aspect of the business. The major essence of a balance sheet is that it gives the manager or investors an idea of the company’s strengths and weak points and the amount invested by shareholders. Also, the main ideology driving the balance sheet is that it denotes the acquisition of the assets through making payment either by borrowing cash or acquiring money from investors (Fridson & Alvarez, 2011). This aspect brings out the overall idea of wanting to monitor the company’s financial status through the use of a balance sheet. It further assists the creditors and interested investors to determine the organization’s financial position because of the list of assets and creditors outlined in the balance sheet. Due to the providence of the financial statement each year, the company is at a position to evaluate its progress on the financial operations of the business. Therefore, if the company is seeking to borrow from banks or the public, the borrowers analyze the company’s balance sheet to determine the firm’s viability to repay the loan. It is also incorporated in the statement of financial income to enable the understanding of business operations (Palepu & Healy, 2007). Therefore, the balance sheet plays a…

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