 For every business concern balance sheet plays a very much important role It is vital financial statement that shows financial position of the concern on a particular point of time Or we can say that it is a snap shot of the financial position of a business concern on a given date on the screen You can see a balance sheet this balance sheet has two sides The one is assets listed on the left-hand side and the second is liabilities and stockholders equity listed on the right-hand side On the asset side, there are two broad categories. The first is current assets comprised of cash and equivalents accounts receivable and inventory The second major category is fixed assets comprising of property, plant and equipment and intangible assets So we can say that a firm may have two types of assets Both intangible and tangibles on the liabilities side We have three classes. The first is current liabilities. The second is long-term liabilities and third is stockholders equity Current liabilities are those liabilities that are to be paid within the one accounting period and Current assets are the assets that are to be converted into cash within one accounting period Without losing their value Long-term liabilities are the liabilities that are to be paid beyond one year These liabilities may be comprising of deferred taxes or long-term debt Stockholders equity is composed of preferred stock, common stock, capital surplus and retained earnings So we can even say that liabilities are the Sources and assets are the resources So assets are the resources that have been financed from the sources And these sources may broadly be categorized into two major heads External and internal internal resources are commonly known as honors equity and External resources external sources are commonly known as debt while going for a balance sheet analysis A financial analyst look into three types of analysis. The first is liquidity. The second is debt and Equity the third is value and the cost We will talk about liquidity Liquidity means firms easiness and ability to pay its debt when they become due Firm key assets go home. Do he's from it divide Kersa take a liquid assets or a non-liquid assets Liquid assets are the assets that can be converted into cash without losing their value in this way The most liquid current asset affirm can have is the cash The second in the order is accounts receivable and least liquid asset is the inventory So inventory takes a much time in order to be liquidated into cash The most non-liquid asset affirm may have are the fixed assets. These may be property This may be Plant or equipment or even affirm may have intangible assets in its balance sheet as a non-liquid assets Now there is a difference between liquidity and profitability if a firm accumulates is its investment in liquid assets the firm may not earn higher profit as The rate of return on liquid assets is much lesser than the rate of return earned by the fixed assets So there is a trade-off between liquidity and a profitability if a firm Wants to earn higher profit the firm may lose Liquidity and the vice versa when we talk about debt versus equity we have to study the concept of liability Liability is an obligation affirm needs to pay on the time it becomes due in the liability side We may have current liabilities and long-term liabilities Long-term liabilities may carry interest along with a firm has to pay interest and Principal both on predefined time this type of payment is called as debt service When we analyze debt and equity we come across a term liability Liabilities and obligation affirm needs to pay when it becomes due Liability may be current liability or may be long-term liability Sometime a liability carries interest along with this means if firm co Mukhera work per interest or principal amount don't go pay karna Hoga this payment co I'm debt servicing kathem the firm may have to serve debt on the time stipulated while signing the debt contract shareholder equity Includes preferred stock Capital surplus and retained earnings. In fact shareholder's equity is the residual interest in the assets of the firm after deducting External claims the third element a balance sheet analysis needs That is value versus cost when we talk about cost This means the historical cost at which the assets were acquired or the liabilities were incurred generally a balance sheet carries accounting values because in Financial accounting generally accepted accounting principles require to report all financial transactions at a cost But market value is different from the books book values market value is the value that is determined in the market between willing buyers and sellers of assets balance sheet jokie accounting basis script are key jatya wo market value co carry nahi karthi Bulk a wo book value or original cost values co carry karthi a jab ke balance sheet ke users like creditors like prospective investors like Managers yeh lok cost ke alawa bhi market values ki talash meh rathim and These values don't appear in balance sheet