Balance Sheet Mechanics

The balance sheet is the financial X-ray that displays all the values a business owns and the sources (debt or equity) used to finance them. The fundamental accounting equation, "Assets = Liabilities + Equity," is the law of gravity in the financial universe. Assets show where the money has been deployed and in what form (cash, inventory, machinery); whereas liabilities and equity explain where that money originated (loans, shareholder capital). When understanding a structure from zero, seeing how the right side (sources) gives birth to the left side (uses) is the key to corporate sustainability.