A balance sheet is a financial statement that provides a snapshot of a company's financial position at a specific point in time. It lists the company's assets, which are what it owns, and its liabilities, which are what it owes. The difference between these two is known as equity, representing the owner's stake in the business. The balance sheet follows the equation: Assets = Liabilities + Equity. This means that everything the company owns is financed either by borrowing money (liabilities) or by the owner's investment (equity). Understanding a balance sheet helps stakeholders, like investors and creditors, assess the company's financial health.