how to read balance sheet ? and at first which thing you
see in balance sheet ?
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Answer Posted / govinda_mahato05
We have to see the major component of Balance sheet contain of both sides i.e. Liabilities and Assets.
A balance sheet measures three kinds of variables: assets, liabilities and shareholder's equity.
Assets are things like factories and machinery that the company uses to create value for its customers.
Liabilities are what the company owes to outside parties, say to its vendors.
And equity is the money initially invested by shareholders plus the retained earnings over the years.
These three variables are linked by the relationship: Assets = Liabilities + Shareholder's equity.
Both assets and liabilities are further classified based on their liquidity, that is, how easily they can be converted into cash.
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