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About the Balance Sheet

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How to use the Balance Sheet in Sage Accounting.


The Balance Sheet is also known as a Statement of Financial Position (or Condition) or an Assets and Liabilities report.

Why is it important?

The Balance Sheet compares your business’s current assets to its liabilities. This shows you how much money is available to your shareholders. It also helps you work out whether you have enough money to pay your bills.

If you have investors, they may use it to gain insight into the business and its operations. They may also look at it to see if there is enough cash available to pay dividends or to invest more in the business.

Potential buyers may also look at the Balance Sheet to assess the state of the business.

You can also use the balance sheet to work out your 'liquidity ratio'. This tells you whether you have enough cash, money in the bank, or assets that can be quickly converted to cash to pay your bills. If you don’t, your business could hit difficulties and forced to stop trading.

The balance sheet shows you:

  • a list of everything your business owns - your total assets
  • a list of everything your business owes - your total liabilities
  • the amount invested by your shareholders - your equity

It's called a balance sheet because each side must match the other.

What's on the report

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