Balance Sheet
The balance sheet is the stock of assets, liabilities, and equity at a date — what the firm owns and owes, not the period’s flow.
Definition
Assets = liabilities + equity at a reporting date. It is a snapshot. Off-balance-sheet commitments, notional derivatives, and operating leases (now mostly on) complete the picture. Flow lives on the income and cash-flow statements.
Why it matters
Solvency, liquidity, and leverage are balance-sheet questions. Earnings can look fine while the sheet is mismatched in duration or currency.
Case
A dealer’s apparent P&L is small versus the sheet: matched repo, inventory, and derivatives notionals. Risk is in the mismatches, not the net income line.
How to read it
Read assets and liabilities by liquidity and duration, then the footnotes. The total is a tautology; the composition is the model.