{"id":7375,"date":"2026-04-04T18:41:59","date_gmt":"2026-04-04T18:41:59","guid":{"rendered":"https:\/\/alhamli.com.sa\/?p=7375"},"modified":"2026-04-04T19:21:57","modified_gmt":"2026-04-04T19:21:57","slug":"balance-sheet-2","status":"publish","type":"post","link":"https:\/\/alhamli.com.sa\/en\/blog\/balance-sheet-2\/","title":{"rendered":"How to Read the Balance Sheet and Understand Your Company\u2019s Financial Position Practically"},"content":{"rendered":"

The <\/span>balance sheet<\/span> or <\/span>statement of financial position<\/span> is one of the most important <\/span>financial statements<\/span>, providing a quick and comprehensive snapshot of a company\u2019s financial status at a specific point in time. In Saudi Arabia, this statement is prepared according to the (International Financial Reporting Standards \u2013 IFRS) approved by the (Saudi Organization for Chartered and Professional Accountants \u2013 SOCPA). It acts as a photographic snapshot of the company\u2019s (assets), (liabilities), and (equity) at a given date. At <\/span>Al-Hamli & Partners<\/span><\/a>, we help companies understand and read this statement, analyze it, and show how it can provide deep insights into their financial health and ability to grow and sustain in the Saudi market. This article aims to simplify how to read<\/span> financial statements for companies<\/span> and understand their key components practically.<\/span><\/p>\n

What is the Definition of the <\/span>Balance Sheet<\/span>?<\/span><\/h2>\n
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financial statement for companies<\/figcaption><\/figure>\n

The <\/span>balance sheet<\/span> is a type of <\/span>financial statement for companies<\/span> that shows what the company owns <\/span>assets<\/span>, what it owes <\/span>liabilities<\/span>, and what remains for the owners equity at a specific date. It is based on the globally applied accounting equation:<\/span><\/p>\n

Assets = Liabilities + Equity<\/span><\/p>\n

This equation means that all resources a company owns are financed either by external sources liabilities or by owners\u2019 investments and retained earnings equity. In the Saudi context, this statement is fundamental for evaluating a company\u2019s financial performance by investors, lenders, and the <\/span>Zakat, Tax and Customs Authority<\/span><\/a> (ZATCA) for <\/span>tax and zakat services<\/span><\/a>. For more information about our services, feel free to contact us at <\/span>0539300404<\/span><\/a>.<\/span><\/p>\n

Key Components of the <\/span>Balance Sheet<\/span><\/h2>\n

When reviewing <\/span>financial statements for companies<\/span>, the <\/span>balance sheet<\/span> consists of three main sections, usually presented in order of liquidity from most to least:<\/span><\/p>\n