Understanding that balance is important for investors?

Balance is one of the three main financial statements that disclose a company’s true financial position. From management to investors, everyone relies on this information to make decisions, whether for managing operations or evaluating investment value.

What is a Balance Sheet really?

Balance Sheet ( or in Thailand called “งบแสดงฐานะทางการเงิน” (Financial Position Statement) is a snapshot of a company’s financial position at a specific point in time, showing what resources the company owns )assets(, how much debt it owes )liabilities(, and how much the owners/shareholders have )owner’s equity(.

What makes a balance sheet special is that it must always be balanced according to the formula:

Assets = Liabilities + Owner’s Equity

This is why it’s called “Balance” )Balance( — both sides of the equation must always be equal, like a balanced scale.

The structure of a balance sheet: 3 main components

)Assets### - Resources

Assets are everything the company owns and values, divided into two groups:

Current Assets - Cash, receivables, inventory, or resources that can be converted into cash within a year, making them highly liquid.

Non-current Assets - Land, buildings, machinery, patents, or long-term investments, which are difficult and slow to convert into cash.

(Liabilities) - Obligations

Liabilities show the money the company must repay to others, divided into:

Current Liabilities - Payable within a year, such as trade payables, overdrafts, short-term debt.

Non-current Liabilities - Payable beyond a year, such as long-term loans, bonds, or student loans.

###Owner’s Equity( - Ownership value

Owner’s equity is what remains after subtracting liabilities from assets, consisting of:

• Shareholder capital - money invested by shareholders
• Retained earnings - profits kept from previous years after dividends

Why is understanding the balance sheet important?

) For management

The balance sheet indicates the company’s financial health, helping management to:

• Assess liquidity and debt-paying ability
• Compare with industry peers
• Plan finances and growth strategies

For investors

Investors use the balance sheet to:

• Analyze profitability potential
• Assess investment risks
• Track financial changes over time

How to read a balance sheet correctly

( Step 1: Check the format and date

First, verify the date of the balance sheet, because it is a snapshot of a specific period, not for the entire year.

) Step 2: Analyze major items first

Look at the sizes of assets, liabilities, and owner’s equity:

• If most assets are inventory, it may indicate sales issues.
• If liabilities exceed half of total assets, the company might be at high risk.

Step 3: Compare with other periods

Review previous year’s balance sheet:

• Are assets increasing or decreasing?
• Are liabilities trending up or down?
• Is owner’s equity growing normally?

Step 4: Use financial ratios

Professional investors often analyze ratios:

• Current Ratio = Current Assets ÷ Current Liabilities
  • Above 1 indicates the company can pay its short-term debts.
• Debt Ratio = Total Liabilities ÷ Total Assets
  • Lower is better, indicating less risk.

Where can you view a company’s balance sheet?

Investors wanting to check a company’s financial position can view balance sheets at the website Datawarehouse.dbd.go.th

How to view a balance sheet step-by-step:

1. Visit Datawarehouse.dbd.go.th
2. Select “Corporate Data and Financial Statements”
3. Enter the company name of interest
4. Click on the “Financial Data” tab
5. Choose the fiscal year, balance sheet type, or compare annual data

Warning: Read the balance sheet with awareness

Data is Historical, not Real-time

The balance sheet is a snapshot of past finances, not current data. If significant events occurred after the balance sheet date, the information may be outdated.

Reliability depends on verification

The balance sheet may be manipulated or contain errors, so it’s important to cross-check with other financial statements and stay updated with company news.

Economic environment changes

Inflation, fluctuating interest rates, or currency devaluation all affect how you interpret the balance sheet. Consider the overall economic situation as well.

The balance sheet is the key to understanding figures

In summary, the balance sheet is a financial document that shows an overview of a company’s financial position, displaying assets, liabilities, and owner’s equity, which must always balance. Understanding the balance sheet helps both management and investors make better decisions.

However, reading the balance sheet should not be the sole basis for decision-making. It should be complemented with income statements, cash flow statements, and other company data to get a complete picture and make confident investment choices.