A balance sheet is a snapshot of your business’s financial standing, and it can be used to calculate a variety of different ratios. It shows how much your practice owns, owes and has invested in itself over time.

It shows you your practice’s overall financial status, and it is a crucial part of making important decisions like investing in new equipment or acquiring new patients. You can also use it to monitor your progress over time, such as comparing the current reporting period to previous ones.

The way a balance sheet is formatted differs slightly depending on your location and which accounting standards you use, but the basic layout remains the same. It lists your assets (what you have that has monetary value) on the left side, followed by your liabilities and shareholder’s equity on the right. Asset accounts are arranged in descending order of liquidity, starting with those that can be converted into cash the most quickly. Liabilities are listed in ascending order of priority, and shareholders’ equity is the sum of the company’s paid-in capital plus any retained earnings that haven’t been distributed as dividends.

Whether you’re an accountant, a business leader or just someone interested in the financial health of companies, understanding how to read and interpret a balance sheet is a necessary skill. You’ll find it in every industry, and it’s the backbone of other financial statements that you’ll use to assess a business’s potential.   Bilanz