The Balance Sheet is a table showing all the firm’s assets and liabilities.

Items on a balance sheet:

  • Cash & Equivalents: highly liquid assets on hand by a firm
  • Recieveables & Payables: unofficial debts, e.g., regular grocery purchases, etc.
  • Inventories: Items not sold
  • Property, Plant, & Equipment (PP&E), i.e. Durable capital assdets
  • Stockholder’s Equity: money recieved by purchasers of stock


  • Assets and liabilities must always sum to zero.
  • counts book value, not market value ⇒ hard to measure the “value” of a firm
  • soft skills (e.g. brand image, reputation) are not reflected (the market may better reflect intangibles).