The balance sheet presents the financial position at a particular date. For a manager, it is a useful starting point for discussion with the accountant, not just a year-end document.
What appears on each side
Assets show the entity's recognised resources. Against them stand equity and liabilities. The accounting relationship is: assets = equity + liabilities.
The specific presentation and measurement depend on the applicable accounting standards and the entity's circumstances.
The balance sheet is not the bank account
Cash is only part of the assets. Customer receivables, inventory and fixed assets may also account for a significant share. A profitable company can struggle to make payments if its customers do not pay on time.
Three useful questions
- Which receivables are overdue, and what action is needed?
- Which liabilities fall due soon, and how will they be paid?
- Which changes since the previous period need explanation?
Read the statements together
For a fuller picture, review the balance sheet alongside the income statement and other applicable information. Clarify whether you are looking at an interim report or a closed statement, and the date to which the data is current.
Discuss significant decisions with your accountant. A number in one cell is rarely enough for a management conclusion without context.
Checked when preparing this article: 26 October 2026. Applicable rules must be assessed for the specific case.