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← Glossary Business glossary

What is Balance sheet?

A snapshot of what the business owns and owes at one moment in time.

Where a P&L covers a period, a balance sheet is a single date: assets on one side, liabilities and equity on the other, and the two sides balance.

For a small business the useful reading is the shape of it. A lot of value sitting in unsold stock, or a lot owed to you and not yet collected, both show up here as strength on paper that you cannot spend.

Related terms
Profit and loss (P&L)A summary of what you earned and what you spent over a period, and what was left.Cash flowThe movement of money in and out of your business over time.DepreciationSpreading the cost of something you own across the years you actually use it.
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