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Business Balance Sheet

Sageworks
January 1, 2017
Read Time: 0 min

What it is, how it’s calculated and why it’s important to small business owners.


Definition

A Balance Sheet reflects an organization’s assets, liabilities and capital at a particular point in time. The total number of assets must equal the sum of liabilities and shareholders’ equity.

Asset: a resource that an individual, organization or country owns that has economic value and is expected to provide future benefit


Liability: a financial debt a company owes to a creditor


Shareholders’ Equity: the net difference between a company’s total liabilities and total assets

Try our free cash flow solution, CashSage.

How it is Used

The Balance Sheet helps a company understand and keep track of what they own and owe, as well as how much their shareholders have invested. It represents the status of a company’s financial health at a particular time, so it is commonly referred to as a “snapshot” of the company’s financial position. The Balance Sheet is used by banks to decide if a company is qualified for additional credit or loans. It is also used by current investors, potential investors, competition, government agencies and many others.


Additional Information

The Balance Sheet, Income Statement, Statement of Retained Earnings and Cash Flow Statement are all interrelated. These four financial statements are prepared in the following order: Income Statement, Statement of Retained Earnings, Balance Sheet, Cash Flow Statement. These four statements make up the cornerstone of a company’s financial statements and help provide insight into a company.

For more information on how financial metrics on the Balance Sheets can affect your business, try our free cash flow solution, CashSage.

About the Author

Sageworks

Raleigh, N.C.-based Sageworks, a leading provider of lending, credit risk, and portfolio risk software that enables banks and credit unions to efficiently grow and improve the borrower experience, was founded in 1998. Using its platform, Sageworks analyzed over 11.5 million loans, aggregated the corresponding loan data, and created the largest

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About Abrigo

Abrigo enables U.S. financial institutions to support their communities through technology that fights financial crime, grows loans and deposits, and optimizes risk. Abrigo's platform centralizes the institution's data, creates a digital user experience, ensures compliance, and delivers efficiency for scale and profitable growth.

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