A balance sheet gives you a snapshot of your business’ financial condition at a specific moment in time. A balance sheet helps you quickly get a handle on the financial strength and capabilities of your business. You’re able to identify and analyze trends, particularly in the area of receivables and payables. A balance sheet helps determine if your business is in a position to expand, or if business can easily handle the normal financial ebbs and flows of revenues and expenses.
Balance sheets, along with income statements, are the most basic elements in providing financial reporting to potential lenders such as banks, investors, and vendors who are considering how much credit to grant you.