Section 2
The Balance Sheet
By Boundless
A balance sheet reports a company's financial position on a particular date.
The balance sheet relationship is expressed as; Assets = Liabilities + Equity.
![Thumbnail](../../../../../../figures.boundless-cdn.com/30886/square/1088925-annual-report-3.jpeg)
The balance sheet of a business provides a snapshot of its financial status at a particular point in time.
![Thumbnail](../../../../../../figures.boundless-cdn.com/13415/square/348608-2617.jpeg)
Balance sheets are prepared with either one or two columns, with assets first, followed by liabilities and net worth.
![Thumbnail](../../../../../../figures.boundless-cdn.com/13414/square/383391-people.jpeg)
Cash, receivables, and liabilities on the Balance Sheet are re-measured into U.S. dollars using the current exchange rate.
Assets on a balance sheet are classified into current assets and non-current assets. Assets are on the left side of a balance sheet.
![Thumbnail](../../../../../../figures.boundless-cdn.com/10269/square/accounting-20equation.jpg)
The balance sheet contains details on company liabilities and owner's equity.
![Thumbnail](../../../../../../figures.boundless-cdn.com/10268/square/800px-monthly-liquidity.jpg)
Liquidity, a business's ability to pay obligations, can be assessed using various ratios: current ratio, quick ratio, etc.
![Thumbnail](../../../../../../figures.boundless-cdn.com/10576/square/ent-cash-flows-trust-funds.jpeg)
Working capital is a financial metric which represents operating liquidity available to a business, organization and other entity.
![Thumbnail](../../../../../../figures.boundless-cdn.com/10347/square/800px-leverage-ratios.jpg)
The debt-to-equity ratio (D/E) indicates the relative proportion of shareholder's equity and debt used to finance a company's assets.
![Thumbnail](../../../../../../figures.boundless-cdn.com/10572/raw/4-depreciation-methods.jpg)
Book value is the price paid for a particular asset, while market value is the price at which you could presently sell the same asset.
![Thumbnail](../../../../../../figures.boundless-cdn.com/10430/raw/4-depreciation-methods.jpg)
The three limitations to balance sheets are assets being recorded at historical cost, use of estimates, and the omission of valuable non-monetary assets.