What does the balance sheet primarily show?

The balance sheet provides a snapshot of a company's financial position at a specific point in time, detailing the organization's assets, liabilities, and equity. This statement reflects what the company owns and owes, highlighting its net worth. By presenting this information, stakeholders can assess the company's liquidity, financial stability, and overall solvency at that particular moment.

The nature of the balance sheet differentiates it from other financial statements. For example, it does not focus on cash flows or revenues and expenses over a period; those aspects are covered in the income statement and cash flow statement. Additionally, while it does not include forecasts, the balance sheet is critical for understanding the current state of the company, aiding in evaluations for investment or credit decisions.