The balance sheet always balances: Assets = Liabilities + Equity. UAE banks use balance sheets to assess creditworthiness before approving loans. Free zone authorities often require a balance sheet as part of trade licence renewal. Investors use it to understand whether a business is capital-light or heavily indebted. A common founder mistake is confusing a strong P&L with a strong balance sheet — you can be profitable and still have a weak balance sheet if you have borrowed heavily to generate that profit.
See also: Profit and Loss Statement (P&L), Equity, Liability, Fixed Assets
