Definition
A snapshot of your finances listing what you own (assets) and what you owe (liabilities). It shows your net worth at a given time.
What to consider
- Use it to get a clear picture of your overall financial health.
- Update it regularly to see how your net worth changes.
- Compare it year over year to track your progress.
Real world scenarios
- Brian reviews his company’s balance sheet to gauge overall financial health before pitching to investors.
- Allison creates a personal balance sheet, listing her mortgage and credit card debt against assets like her home and savings accounts.
- Two startups compare each other’s balance sheets before discussing a potential partnership, checking for solid net worth and limited liabilities.
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