Now, liabilities can be further subdivided into two categories: This section of the balance sheet shows the money that a company owes to others, like loan expenses, recurring expenses, other forms of debt, etc. There are three main components of a balance sheet.
Moreover, you can pair a balance sheet with other financial statements to calculate financial ratios and conduct fundamental analysis.
It helps evaluate a business’s capital structure and also calculates the rate of returns for its investors. A company’s balance sheet is a financial record of its liabilities, assets and shareholder’s equity at a specific date.