What is the balance sheet?

It shows all your assets and liabilities.

Consider your personal balance sheet.

You may own a house. That is an asset on your balance sheet. In finance we call it a fixed asset, because you’ll keep it probably for a long time.

You may then have a mortgage secured on your house. That is a liability on your balance sheet. We call it a long-term liability, because you’ll have it for a long time.

So you may have a car. Again an asset. If you have a car loan to fund it, then that’s a liability.

Cash in your bank account is called a current asset. Current because it is liquid. That means it is cash or easy to convert into cash.

If you are overdrawn you have a current liability, because we may have to repay it soon.

If you are self employed you pay your tax once a year. So each month a tax liability grows on your balance sheet.

A company balance sheet is exactly the same.

A list at any point in time of all the assets and liabilities the company has.

If you have more assets than liabilities, then that is a good thing.

If you have more liabilities than assets, then you could go bust.

Get to know you

What’s your influence style?

Calculator, Dashboard, Coach, or Leader?

Take our FBP Ignite survey to learn more about your FBP style and create your personalised development plan

Our Training Options


Read our latest posts