In short
- The balance sheet is a photo on a given date.
- Assets show what the company owns, liabilities and equity how it pays for them.
- The two sides are always equal.
The two sides of the balance sheet
Here is the balance sheet of a made-up company:
| Assets | Million MAD | Liabilities and equity | Million MAD |
|---|---|---|---|
| Factories and machines | 500 | Equity | 400 |
| Stock | 150 | Financial debt | 300 |
| Customer receivables | 300 | Supplier debt | 300 |
| Cash | 50 | ||
| Total | 1,000 | Total | 1,000 |
What each line means
- Equity: money put in by shareholders and profits kept in the business.
- Financial debt: loans, on which the company pays interest.
- Customer receivables: money customers still owe.
- Stock: products or materials not yet sold.
Three useful calculations
| Indicator | Calculation with the example | Result |
|---|---|---|
| Net debt | 300 − 50 | 250 million MAD |
| Net debt / equity | 250 ÷ 400 | 62.5% |
| Equity / total balance sheet | 400 ÷ 1,000 | 40% |
None of these figures is good or bad in itself. A bank, a property developer and a services company do not have the same balance sheet.
Traps to know
- A photo can mislead: the cash on a single day does not tell the whole story.
- Rising stock can mean slower sales, or normal preparation for business.
- Rising receivables can mean customers are paying later.
- Banks have a very different balance sheet: deposits and loans play a central role.
The balance sheet is read together with the income statement: see our guide to reading a listed company’s results.
Frequently asked questions
Is debt always bad?
No. It can finance growth. What matters is the ability to repay it and its cost.
Where can I find a listed company’s balance sheet?
In its financial reports, on its website and on those of the AMMC and the Casablanca Stock Exchange.
This article is for information and educational purposes only. It is not investment advice or a recommendation to buy or sell any security. Investing in shares involves a risk of capital loss. Check figures against official sources (Casablanca Stock Exchange, AMMC) and consult a licensed professional. Read the full disclaimer.
