I have decided to free this content up from being a Page into a Post so I could put my page space to better use, akan datang. Nevertheless this is very important stuff to make sense of the annual reports that the companies you invest in send yearly.
Making sense of a company's Balance sheet - it should all balance up
In a Balance sheet there's two parts of equivalent values:
1) Total Assets $ =
2) Total liabilities and Equity
This is because Equity = Total assets - Total liabilities, so both values would be same.
Equity is also known as net asset or net worth of a company. It comprises of two parts - Retained earnings and Treasury stocks
Reference: http://news.morningstar.com/classroom2/course.asp?docId=145091&page=7&CN=
An important ratio that you can derive from here is this:
Current asset / Liabilities
If it's more than 1.5, the company is generally doing okay (not neck-high in debt)......