A balance sheet, also referred to as a Statement of Financial Position, is a snapshot of the financial position of an entity as on a certain date. It represents the assets and liabilities of the entity on the particular date. Owner’s equity (networth) is equal to assets minus liabilities. The assets are listed in the order they can be converted to cash; the liabilities, in the order they must be liquidated. Thus, a balance sheet acts as an indicator of the company’s health, such as the liquidity position, leverage, financial soundness, etc.