The Balance Sheet contains the financial position of a company in a given period of time through three main values, namely Assets, Liabilities and Equity. The Balance sheet can be a very good tool for you to make financial comparisons regarding the different years of operation and is also very simple to develop. Just make sure that you understand the next three main variables.
The Assets refer to all the resources which belong to the company and are expected to generate economic benefits for the firm in the future.
The Liabilities refer to obligations which were contracted in the past and expected to create economic disadvantages and expenses on the company.
The Equity simply consists on the following equation: Equity=Assets-Liabilities. The equity (the result of this equation) will actually show you how much worth is the firm. This is a very important factor to consider when resenting to investor because they may want to buy an Equity stake of your Startup and you should be sure about the value of the company.
To conclude this article, we will leave you with an example of a Balance Sheet for you to easily understand how to properly evaluate a Company/Startup (financially speaking).