What does a balance sheet show for a business entity?

A balance sheet is a financial statement that provides a snapshot of a business entity's financial position at a specific point in time. By displaying the assets, liabilities, and owner's equity, it allows stakeholders to assess the company's financial health.

Assets represent everything that the company owns and can use to generate revenue. Liabilities indicate what the company owes to outside parties, such as loans or accounts payable. Owner's equity reflects the residual interest in the assets of the business after liabilities have been deducted.

This structure provides essential insights into the company's operational efficiency and financial stability, making it a valuable tool for managers, investors, and creditors. It is crucial to distinguish this from other financial documents. For instance, the revenue and expenses over a period are typically shown in an income statement, while future profits are often projected in financial forecasts, and current market conditions would be analyzed in different contexts, such as market analysis reports, not a balance sheet.