Business Basics: The Balance Sheet

If you ever plan on running a company, or perhaps plan one day to invest in or acquire one, at least a basic understanding of finances is absolutely critical. In this video from AIChE Academy, we look at one of the necessities: the balance sheet. The balance sheet's purpose is to summarize a company’s assets, liabilities, and stockholders' equity at the end of a reporting period, usually a calendar quarter or year.

This video reviews what exactly is meant by “balance,” looks at the key elements included in the definition of each balance sheet item, and includes a discussion of depreciation and working capital. In this example, we'll be looking at an actual statement from a major US chemical company.

If you’d like to know more about tracking and assessing a company's or project's financial health, you may also want to check out the AIChE Academy course Cash Flow Principles for Chemical Engineers.