A balance sheet is a snapshot of what a company owns and owes at a single point in time — typically the end of a financial year or quarter — unlike a P&L, which covers a period. It's built around one identity that always holds: assets equal liabilities plus equity. Everything a company has (assets) was funded either by money it owes to others (liabilities) or by money contributed by and retained for shareholders (equity).

Assets are split into non-current and current. Non-current assets are things a company expects to hold and use for more than a year — plant, property, equipment, and intangible assets like patents or brand value. Current assets are expected to convert to cash within a year: inventory, trade receivables (money owed by customers), and cash itself.

Liabilities follow the same split. Non-current liabilities are obligations due beyond a year, most commonly long-term borrowings. Current liabilities are due within a year — trade payables (money owed to suppliers), short-term borrowings, and similar near-term obligations.

Equity (also called shareholders' equity or net worth) is what remains for shareholders after every liability is subtracted from every asset. It's made up of share capital (the face value of shares issued) and reserves and surplus (accumulated profit retained in the business over time, plus other reserves), rather than being a single number pulled from anywhere else on the statement.

Several figures used elsewhere on this app come directly from the balance sheet. Book value per share is total equity divided by shares outstanding — what would be left per share if, hypothetically, every asset were sold at its recorded value and every liability paid off. Debt to equity divides total borrowings by total equity, showing how much of a company's funding comes from debt relative to shareholder capital. Total assets, divided by revenue or by equity, feeds into asset turnover and the equity multiplier, two of the three components this app's DuPont breakdown uses to decompose ROE.

Because a balance sheet is a snapshot, not a flow, comparing the same line item across several reporting dates — rather than reading a single date in isolation — is what shows whether a company's asset base, borrowing, or equity is growing, shrinking, or holding steady over time.