A balance sheet is a financial statement that provides an overview of a company's assets, liabilities and shareholders' equity at a specific point in time. It presents a clear picture of what a business owns (assets), how much it owes to others (liabilities) and the amount of money that would be left for its shareholders if all the debts were paid off (shareholder's equity). The balance sheet follows the accounting equation: Assets = Liabilities + Shareholders' Equity. This means, whatever assets a company has purchased or invested in, it must have either borrowed money to do so or raised capital from shareholders through selling shares. In essence, a balance sheet is an important tool for understanding the financial health of a business and making informed decisions about investment opportunities.