Understanding the balance sheet

A balance sheet lists, at one point in time, what a company owns, what it owes and what is left.

Updated：2026-11-08

The basic equation

Assets = liabilities + equity. Assets are the resources the company owns; liabilities are what it owes to others; equity (also called net worth or shareholders’ equity) is the part of assets left for shareholders after liabilities.

Current and non-current

• Current assets: can be turned into cash within a year or an operating cycle, such as cash, receivables and inventory.
• Non-current assets: used for the long term, such as plants, equipment and long-term investments.
• Current liabilities: due within a year, such as payables and short-term borrowings.
• Non-current liabilities: due after more than a year, such as long-term loans and corporate bonds.

A few common ratios

• Debt ratio = total liabilities ÷ total assets: how much of the assets is financed by borrowing and other liabilities.
• Current ratio = current assets ÷ current liabilities: how well short-term assets cover short-term liabilities.
• Book value per share = equity attributable to the parent’s shareholders ÷ shares outstanding; price-to-book is the share price divided by it.

Reasonable ranges differ a lot between industries (a financial company’s liability structure is nothing like a manufacturer’s), so compare within the same industry and over the years for the same company.

When reading

• A balance sheet is a stock at one date, while the income statement and cash flow statement are flows over a period; read the three together.
• The numbers are the raw values the company announced as required. This site does not score or rate them.

Where to see it on this site

On a stock page, open the Financials tab and switch to Balance sheet to see total assets, total liabilities, equity, debt ratio, book value per share and current ratio over time.

This article only explains terms and how to read a statement. It is not investment advice.