MATT BRIGIDA
Associate Professor of Finance (SUNY Polytechnic Institute) & Financial Education Advisor, Milken Institute
Financial statements are the main way in which a company communicates its performance to the market.
The balance sheet is a snapshot of the assets a firm owns, and how they are financed (i.e. its [capital structure](https://en.wikipedia.org/wiki/Capital_structure)). Since every asset must be claimed by either stock or bond holders, we have the identity $Assets \equiv Liabilities + Stockholders'\ Equity$.
Note the use of $\equiv$ meaning *is defined as* and not $=$ which means 'is equal to'. An equation such as $x^2 - 2 = 0$ will only hold for some ([famous in the case of this equation](https://en.wikipedia.org/wiki/Square_root_of_2)) values of $x$. However, the balance sheet identity will always hold.
This is because of the definition of equity, which is whatever is left over after a company pays its debts. So the value of equity is defined as $Assets - Liabilities$ and the balance sheet identity always holds.
*1*. Market vs. Book (Accounting ) Value:
*2*. Leverage:
*3*. Liquidity:
The income statement measures a firm's performance over some period of time.
The cash flow statement is a combination of balance sheet and income statement.
In the following interactive app you can query the balance sheet and income statement for any stock trading on US exchanges.
For example, search for Tesla's (TSLA) financial statements.