A balance sheet of the company is one of the three core financial reports, used to evaluate the trajectory of that particular business. Fundamental analysts use balance sheet along with other financial statements to calculate the financial ratios.
There are three main Constituents under a balance sheet-
- Asset - What the company owns (cash, Inventory, property)
- Liabilities - what the company owes (Loans, rents, Wages, Tax)
- Shareholder’s Equity - Money invested by the shareholders.
The three main components are further broken down into multiple accounts that give a snapshot of the company’s financial oversight. The nature of the business varies these accounts. The figures mentioned under the accounts guide an investor as to how much the business owns and how much it owes.