The balance sheet is one of the financial statements required of all public companies for their quarterly and annual statements. Even a privately held small business should prepare year-end financial statements for review by executives, management, and private investors. Each SEC filing must include the following financial statements: balance sheet, income statement, and cash flow statement. It's provided along with the cash flow statement and the income statement to allow investors and other stakeholders a means for analyzing the company's overall health. The balance sheet provides a look at the company's net value and financial position in terms of the company's assets, total liabilities, and even projected earnings. When evaluated along with the other financial statements, a balance sheet provides a view of the company at a specific point in time. The income statement, balance sheet, and cash flow statement offer financial analysts a clear snapshot of a company's financial position at a specific point in time from which to project future shareholders equity. After all, no firm maintains financial health without a clear accounting of the books.
One can think of the balance sheet in terms of this equation:
Assets = Liabilities + Equity
The balance sheet provides shareholders a view of the company at a specific point in time, including assets, liabilities, and material events at the end of a fiscal period. Frequently, figures from previous periods are displayed along with the current numbers as as way to account for fluctuations in shareholders equity. This way, investors can measure the company's assets, relative growth, and overall valuation. Furthermore, shareholders use a balance sheet as a tool for measuring liabilities and shareholders' equity. When analysts assess all of the financial statements they can arrive at a sound assessment of the company and its place in the market.