A balance sheet is a financial statement that reports a company’s assets, liabilities, and shareholder equity at a specific point in time¹. It provides a snapshot of a company’s finances (what it owns and owes) as of the date of publication. It also shows how the assets are financed, either through either debt or equity.

The balance sheet adheres to the following accounting equation, with assets on one side, and liabilities plus shareholder equity on the other, balance out:

Assets = Liabilities + Shareholder Equity

Assets are the resources that a company owns and uses to generate income, such as cash, inventory, property, equipment, etc. Liabilities are the obligations that a company owes to others, such as loans, accounts payable, taxes, etc. Shareholder equity is the amount of money that would be left over if a company paid off all of its liabilities and distributed the remaining assets to its shareholders. It represents the owners’ claim on the company’s assets.

The balance sheet is one of the three core financial statements that are used to evaluate a business, along with the income statement and the cash flow statement. It can help investors and creditors assess a company’s financial performance, liquidity, solvency, and efficiency¹.

A Balance Spreadsheet

A balance spreadsheet, commonly known as a balance sheet, is a financial statement that summarizes a company’s or individual’s financial position at a specific point in time. It details the assets (what you own), liabilities (what you owe), and shareholders’ equity (the owner’s net worth) to provide a snapshot of financial health.

The balance sheet is based on the fundamental accounting equation:

\text{Assets} = \text{Liabilities} + \text{Shareholders’ Equity}Assets=Liabilities+Shareholders’ Equity

This equation must always be in balance, hence the name. Here’s a brief overview of each component:

• Assets: These are resources owned by the company that have economic value. Assets can be current (cash or assets that can be converted into cash within a year) or non-current (long-term investments, property, plant, and equipment).
• Liabilities: These are obligations the company owes to outside parties, which can be current (due within a year) or long-term (debts due after one year).
• Shareholders’ Equity: Also known as owner’s equity, this represents the residual value of assets minus liabilities. In other words, it’s what would remain if all assets were liquidated and all liabilities paid off.

The balance sheet is a key tool for assessing liquidity, solvency, and the overall financial stability of a business or individual. It’s often used alongside other financial statements like the income statement and cash flow statement for a comprehensive financial analysis.

Creating a balance spreadsheet is a great way to manage your financial data. It helps you keep track of your assets, liabilities, and equity, giving you a clear picture of your financial health. Here are some templates you might find useful:

Basic Balance Sheet Template: This template is simple and easy to complete. It allows you to enter details of your current fixed and long-term assets, as well as your current and long-term liabilities. The template will automatically calculate your net worth or balance.

Pro Forma Balance Sheet Template: Ideal for existing businesses or for projecting data in a business plan. It provides year-by-year comparisons of assets and liabilities, helping you determine your company’s equity.

Monthly Balance Sheet Template: With this template, you can track your financial obligations and solvency goals on a monthly basis. It includes sections for assets, liabilities, and owner’s equity, as well as common financial ratios for a thorough financial health evaluation.

You can customize these templates to suit your specific needs, whether it’s for personal use or for your business. They’re available in various formats like Excel, Google Sheets, and PDF for easy editing and sharing. Remember, maintaining an up-to-date balance sheet is crucial for making informed financial decisions.