Balance Sheet

What Does Balance Sheet Mean?

A balance sheet is a financial statement that records a business’s capital, assets, and liabilities at a specific point in time.

Insuranceopedia Explains Balance Sheet

The balance sheet gets its name from the requirement that it must show a balance between the assets on one side and the liabilities and sources of capital on the other. Assets may include cash, future income, and properties, while liabilities could include loans and debts owed to suppliers. Sources of capital might encompass money invested by the owners or shareholders. For small businesses, the assets recorded on a balance sheet often include property and equipment that can be protected under a business owner’s policy.

The balance sheet is a crucial piece of information for investors, providing insight into the financial health and stability of a business. Insurers often review a balance sheet when pricing coverage, since a company’s assets and liabilities help determine what types of business insurance it needs.