Balance Sheet

• Balance sheet refers to a financial statement that reports a company’s assets, liabilities, and shareholder equity at a specific point in time.
• The balance sheet adheres to an equation that equates assets with the sum of liabilities and shareholder equity.

  ` Assets = Liabilities + Shareholders’ Equity `

• Shareholder equity is the money attributable to the owners of a business or its shareholders. It is also known as net assets since it is equivalent to the total assets of a company minus its liabilities or the debt it owes to non-shareholders.

• Retained earnings are the net earnings a company either reinvests in the business or uses to pay off debt. The remaining amount is distributed to shareholders in the form of dividends.

Balance Sheet vs Income Statement

How to do Valuation

Calculating Book value

• Book value is the value of a company’s assets after netting out its liabilities.
• It approximates the total value shareholders would receive if the company were liquidated.