--- title: What is balance sheet size and why is it needed? date: 2017-10-12T10:04:08Z modified: 2023-03-01T10:44:55Z permalink: "https://grow.ee/mis-bilansimaht-ja-milleks-seda-tarvis/" type: post status: publish excerpt: The size of a company is assessed by balance sheet size. The balance sheet shows the extent to which the company's assets are financed by the owners' assets and by external funds (liabilities). wpid: 4758 timestamp: 2023-03-01T10:44:55Z tags: - Accounting --- Balance sheet size is **the sum of current and fixed assets**, which is always equal to **the sum of liabilities and equity**. We can therefore find balance sheet size in two places on the balance sheet – total assets and total liabilities. **The size of a company is assessed by the balance sheet**. The balance sheet shows the extent to which the company's assets are financed by the owners' assets and by external funds (liabilities). The three most important indicators that characterize a company are the balance sheet, turnover and number of employees. **The balance sheet is not a constant value**, as it can increase or decrease as a result of economic activity (or, under certain conditions, remain the same). If the balance sheet has increased, the reason is usually either a loan taken or a profit earned, or it has been increased by contributions from share capital owners. The balance sheet decreases in the event of losses and repayment of loans. It is worth monitoring the balance sheet, because it is also related to, for example, auditing and consolidation obligations. ## Balance sheet and its calculation process As can be seen from the introductory paragraph, this cannot be a complicated calculation in itself. The basis for calculating the balance sheet volume is the balance sheet of a company or institution, or [according to the law](https://www.riigiteataja.ee/akt/125052012016) "an accounting report that reflects the financial position (assets, liabilities and equity) of an accounting entity as of a certain date". Since the **asset side of the balance sheet must equal the liability side**, it does not matter which side the balance sheet volume is calculated on. What is reflected in the balance sheet probably does not need repeating, but below is a brief overview of which balance sheet items are reflected in the respective sections: - **assets include current and fixed assets (financial assets, investments in real estate, etc.);** - **liabilities** include liabilities and equity. ## How often and why should the balance sheet volume be calculated? The balance sheet represents an overview of the economic situation of a company or organization at a certain point in time**. Since its purpose is to obtain a useful overview, it makes no sense to prepare a balance sheet and calculate its volume too often. Although it can be done practically at any time, its greater value lies in the longer-term analysis. According to the law, the balance sheet must be prepared as of the end of the financial year and the status of the previous financial year is also presented along with these data. Thus, it is possible to **compare the results of two years**. Although, as mentioned earlier, if necessary (e.g. when applying for a loan or lease, [covering an equity deficit](/?p=4563)), it is also possible to prepare an interim balance sheet. ## Advantages of outsourcing the service Regardless of the size of the company, the annual report always includes a balance sheet. By ordering the Grow accounting service, our experienced accountants will also prepare all the necessary **reports containing the balance sheet volume**. If you want to get rid of cumbersome accounting activities for you, [contact](https://grow.ee/wp-content/uploads/wp-mfa-exports/page/kontakt.md) the first **100% paperless accounting office Grow**. Come to us for a consultation and we can choose a suitable solution together!