Interview Your Investments: Balance Sheet Key Terms

Written by: Alexandra (she/her)

2 min read | Published: September 10, 2026

A company’s balance sheet is one of the most important financial statements produced. This article provides a comprehensive list of what a company owns, what a company owes and what value is left over. Reading this statement and understanding the values reflected can help investors calculate and deduce a company’s financial health. An organization’s balance sheet typically includes several key terms that must be understood to effectively utilize the information listed:

Current assets: These are company assets that can be converted to cash within the current fiscal year. This typically includes inventory, cash or cash-equivalent items, and prepaid expenses such as rent or insurance. It also includes money owed by customers, also referred to as accounts receivable.
Non-current assets: This includes company assets that cannot be converted to cash within the current fiscal year. These assets include investments held beyond one year and company property and equipment, such as company buildings, machinery and vehicles. It also includes intangible assets and intellectual property, like patents and trademarks, and company taxes due for overpayment or advance payment, also referred to as deferred tax assets.
Current liabilities: These are the costs due within the current fiscal year and can include business loans or credit due within the year, and funds owed to suppliers and vendors, also known as accounts payable. It also includes unearned revenue from goods and services yet to be fulfilled, and employee wages or company taxes, referred to as accrued expenses.
Non-current liabilities: These are the costs due outside of the current fiscal year, including future tax payments and business loans with payments expanding past the current fiscal year. It also includes obligations to employee retirement benefits, also known as pension liabilities, and long-term commitments for company buildings and equipment, referred to as lease liabilities.
Common stock: Relates to company stock where investors purchase partial ownership of the company, typically including voting rights and dividends. On the balance sheet, the value of all issued common stock will be listed.
Preferred stock: Pertains to company stock where investors buy partial ownership of the company without any voting rights; however, they receive guaranteed, fixed dividends. On the balance sheet, the value of all issued preferred stock will be listed.
Retained earnings: Designates company profits that are not paid out as dividends to shareholders of common and preferred stock.
Treasury stock: Specifies the amount of company stock that the company itself buys back.

These key terms can help investors review a company’s balance sheet and gain some understanding of its financial performance. From there, they may use the numerical values listed to calculate key financial ratios that can help determine the risk of potential investments.