Reading a balance sheet involves understanding the relationship between assets, liabilities, and equity. Here are some key steps:
1. Check Total Assets: Ensure that the total assets are listed clearly, both current and non-current. 2. Examine Liabilities: Look at both current and non-current liabilities to understand the company's obligations. 3. Evaluate Equity: See how much equity is held by shareholders and how much profit has been retained. 4. Analyze Ratios: Use financial ratios to get deeper insights into the company's financial stability and performance.