Spotting Balance Sheet Red Flags

Author(s): Jennifer Rozon

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Balance sheets contain valuable information for assessing a company's financial health. IT professionals should pay close attention to financial statements and use this guide to gain valuable insights. This is the second note in a three-part series on financial analysis. Other notes include, “Income Statements: The Crystal Ball of Vendor Viability” and “Financially Impact the Bottom Line.”

The Balance Sheet

The balance sheet lists what a company owns and owes at a specific point in time. This statement is different than the income statement, which measures profitability over a specific period of time. The balance sheet shows the financial strength of a company in three major categories: Assets, Liabilities, and Equity. Assets are equal to Liabilities plus Equity.

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