Balance Sheet
A balance sheet is a financial statement showing a company's assets, liabilities, and shareholders' equity at a specific point in time. It follows the fundamental equation: Assets = Liabilities + Equity. It's one of three core financial statements investors analyze.
Understanding the Concept
• Assets: what the company owns (cash, inventory, property) • Liabilities: what the company owes (debt, accounts payable) • Equity: shareholders' ownership stake (assets minus liabilities) • Snapshot in time vs. income statement (period of time)
Real-World Example
Apple's balance sheet shows $165B in cash and investments, $110B in total liabilities, and $55B in shareholders' equity. A strong balance sheet like this (more cash than debt) gives the company flexibility to weather downturns, buy back stock, or make acquisitions.
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