The Balance Sheet, also known as the Statement of Financial Position, provides a snapshot of your business's financial health. It shows: - Assets – What your business owns
- Liabilities – What your business owes
- Equity – The remaining value for shareholders
This report helps assess liquidity, financial stability, and investment potential. The balance sheet follows a fundamental equation: Assets = Liabilities + Equity This ensures that everything your business owns (assets) is either financed by debt (liabilities) or by the business owners and shareholders (equity).
What’s included in the report Expand any of the following categories to learn more: ▼ Assets Assets represent everything your business owns. These are divided into: Fixed assets (long-term assets that a business owns for more than a year): - Office equipment, IT, fixtures, fittings, and machinery
- Property and vehicles
Current assets (short-term items that can be converted to cash within a year): - Bank balances and cash – Money in business bank accounts
- Trade debtors – Unpaid invoices from customers (Accounts Receivable)
- Stock or inventory – Finished goods, raw materials, or products available for sale
The report separates total fixed assets and total current assets before calculating total assets. ▼ Liabilities Liabilities refer to the financial obligations of your business. These include: Current liabilities – Short-term debts due within a year, such as: - Bank loans and credit cards
- Money owed to suppliers (Accounts Payable)
- Taxes owed to the government
Non-current liabilities – Long-term obligations due after more than a year, such as mortgages and business loans. The report calculates total current liabilities and total liabilities before determining net assets. ▼ Net assets Net assets represent the value of the business after deducting liabilities from assets: Net Assets = Total Assets - Total Liabilities This figure answers "What is my business worth?". ▼ Equity Equity represents the value remaining for shareholders after liabilities are deducted from assets. It includes: - Retained earnings – Profits reinvested in the business instead of distributed to shareholders
- Shareholder equity – The amount invested by business owners or shareholders
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