A balance sheet lists assets on one side and liabilities plus equity on the other. The two sides must equal, which is why it is called a balance sheet. It answers a simple question at a single moment in time: what does the firm own, and who has claims on it?
Key takeaways
- Assets equal liabilities plus equity by definition.
- It is a snapshot, not a video; cash can change the next day.
- Compare several periods to see whether debt or cash is rising.
- Off-balance-sheet items and notes still matter, so read beyond the totals.
Why it matters in Ethiopia
Bank and insurer balance sheets dominate local listed names. Understanding loans, deposits, and capital on those statements helps you read Ethiopian financials more carefully than profit headlines alone.