Balance Sheet Basics

Learn how to prepare and use a balance sheet to draw insights into the financial health of your business

Agriculture, seafood, and forest products operations use the balance sheet as a statement of financial position. This powerful statement reflects the sum-total of all past business transactions and captures every item that is owned and owed by a business at a point in time. Balance sheets prepared at regular intervals allow business owners to assess comparative results and track financial performance. This makes it an important communication tool among family members, business partners, and third parties, not only to stay aligned, but also as a learning tool for newer members of the business team.

Beyond serving as a statement of financial position at a point in time, the balance sheet enables operations to plan for possible scenarios and answer strategic questions like:

• Do I have sufficient working capital to cover unexpected increases in input costs?
• Am I prepared for the next opportunity for growth?
• How much debt can the business afford?
• Should we consider purchasing new equipment now?
• Or whatever your big what-if or strategic question is…

Next Steps

Once you have built the balance sheet, take your financial statements to the next level with more financial tools or a discussion with your Northwest FCS team.

Additional Financial Management Resources

Learn more about financial management for agriculture, seafood, and timber operations with additional resources from Northwest FCS:

• Cash Flow Budget Basics
• Income Statement Basics