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Curious Cat Investing Dictionary: Balance Sheet

Balance Sheet - an accounting of the assets and liabilities of an organization as of a specific date.

Related Terms:

Assets - things of value owned by the company such as: cash, securities, accounts receivables, inventory. Liabilities - payments owed by the organization plus possible debts. A possible debt, for example, could be a lawsuit where the exact amount of the liability is not know but where a reasonable belief is that they may. In such cases a company must estimate the liability amount. Current Assets - cash and assets that will be converted into cash within the next year.

• Current Liabilities - such as bonds and savings accounts.
• Tangible Assets - physical assets such as the cars manufactured by Toyota or the factories they manufacture good in.
• Intangible Assets - assets that are not physical in form, such as accounts receivable, patent and brand name (a form of good will).
• Inventory - tangible assets held by the company to sell to customers. In analyzing balance sheets a rise in inventory can be seen as a dangerous sign - the company is having trouble selling what it is producing. However, each situation must be judged and it may be that inventories are increasing because they we abnormally low previously or due to a planned stocking of a product launch that is expected to sell quickly.
• Book Value - Net asset value of a company. Total assets minus intangible assets and liabilities. It usually is not a very accurate measure of the worth of a company because the values assets are carried on the books can often be quite different than actual worth.

Online Resource:

• The Interactive Balance Sheet, TheStreet.com.
• How to Read a Balance Sheet, fool.com.
• The Balance Sheet: What Does It Mean?, Ohio State University fact sheet.
• Balance Sheet Analysis, Ameritrade.