From the course: Running a Profitable Business: Understanding Financial Ratios
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The balance sheet
From the course: Running a Profitable Business: Understanding Financial Ratios
The balance sheet
- The balance sheet is a listing of a company's assets, its resources, its valuable things. Its cash, its land, its inventory, the things that it holds to sale. Those are its assets. And the other part of the balance sheet is the listing of where the company got the money to buy those assets, the liabilities and the equities. The balance sheet embodies The Accounting Equation, one of the greatest inventions of the human mind, invented in Italy over 500 years ago. A listing of the assets, which is easy, anybody can list assets. But the insight is to then also list where we get the money to buy those assets, the liabilities and the equities. That's the balance sheet. Now, assets. They're valuable resources. Cash, for example. If you look at the balance sheet of Apple, you see that Apple has lots of cash for some very interesting reasons that I'd love to talk about at some length, but maybe some other time, we'll…
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