Balance Sheet
A snapshot of a company's assets, liabilities, and equity at a single point in time, showing what it owns, what it owes, and what is left for owners.
The balance sheet is the statement of position: assets on one side, liabilities and equity on the other, always in balance because equity is defined as the residual. For a trade creditor, it is the primary source for liquidity analysis (current assets versus current liabilities), leverage analysis (liabilities versus equity), and the all-important question of what stands behind your unsecured claim if the business fails.
Read a customer's balance sheet with a liquidation discount in mind. Cash is worth face value; current receivables perhaps 70-80%; inventory 30-60% depending on how specialized it is; goodwill and other intangibles usually nothing. A company with $5M of book equity built mostly on intangibles and stale inventory offers far less protection than the number suggests — which is why credit analysts compute tangible net worth as a stricter measure.
Also check what the balance sheet does not show plainly. Footnotes and supporting schedules reveal secured lenders (whose blanket liens on receivables and inventory rank ahead of you), operating lease obligations, guarantees, and related-party loans. On private-company statements, ask whether owner loans in liabilities are subordinated; if they are not, the owner is a competing creditor. The balance sheet date matters too — a December 31 snapshot of a seasonal business can look very different from the June reality.
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