Explanation of the 2nd Financial Statement: The Balance Sheet
The second financial statement that you'll encounter in the annual report is the balance sheet. The basic concept underlying a balance sheet is simple enough: total assets equals total liabilities plus equity. A lot of investors tend to focus on the income statement, but the balance sheet is just as important a source of information. You can use the balance sheet to determine the firm's liquidity, to see how leveraged the company is, or just to see all the specific assets and liabilities of the company.
The following list will teach you how to read a balance sheet and use the information from it to find out the company's current financial standing.
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