If the P&L statement shows how profitable a company was over a given timeframe, we can say that the Balance sheet is like a momentary picture of the firm’s condition at the time of preparation. The Balance sheet shows what a company owns (assets) and what it owes (liabilities and equity). This statement allows us to gain an idea about leverage, sustainability, and liquidity.

Some other related topics you might be interested to explore are Profit & Loss, Cash Flow, and 3-Statement Model.

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Balance Sheet is among the topics included in the Corporate Finance module of the CFA Level 1 Curriculum.