How to Read a Balance Sheet

What it owns and owes.

The balance sheet is a snapshot, on one date, of everything a company owns (assets) and owes (liabilities). The difference is shareholders' equity: the owners' net worth. Assets = Liabilities + Shareholders' equity Assets Rs 500, liabilities Rs 300. Equity = Rs 200. Growing equity Net worth building, a good sign. Rising debt Check earnings comfortably cover interest. Cash position Healthy cash gives staying power and options. Book value, debt-to-equity, and ROE all come straight from the balance sheet.

Part of Learn NEPSE Investing, a free course on reading Nepali company accounts and charts. Section: The Statements.