Dr. Paul Borosky, DBA, MBA
Business Consultant & Author
Guide 11 of 34 · The Balance Sheet
How to Read a Balance Sheet (Apple Example)
One day. Everything it owns, everything it owes.
The income statement covers a whole year. The balance sheet freezes one single day. Apple’s shows $359.2 billion in assets, $285.5 billion in liabilities, and a retained earnings line below zero. Walk it top to bottom with real numbers, and every balance sheet after this one gets easier.
Last Updated: 10/27/2026 · Written by Dr. Paul Borosky, DBA, MBA
The Short Answer
How Do You Read a Balance Sheet?
Textbook Definition
A balance sheet reports a company’s assets, liabilities, and shareholders’ equity at a specific point in time. Assets always equal liabilities plus equity.
In Plain English
It is a snapshot of one day. The top half lists what the company owns. The bottom half lists what it owes and what is left for the owners. Read the short-term lines first, then the long-term ones, then compare five years.
The Rule Every Balance Sheet Follows
Assets = Liabilities + Equity
Apple, fiscal 2025: $359.2B = $285.5B + $73.7B
That one line is the accounting equation, and it is why the two halves always match. New to a term? Every one is in the financial statements glossary.
Where It Lives
What Is the Balance Sheet Called in a 10-K?
Apple titles it the Consolidated Balance Sheets. The filing’s labels do not always match the textbook. Here is the translation.
| Filing label | What it means |
|---|---|
| Cash and cash equivalents | Cash |
| Marketable securities (current) | Short-term investments |
| Accounts receivable, net | Accounts receivable |
| Vendor non-trade receivables | Money suppliers owe Apple (the book adds it to receivables) |
| Total current assets | Current assets |
| Property, plant and equipment, net | PP&E after depreciation |
| Total current liabilities | Bills due within a year |
| Term debt (non-current) | Long-term debt |
| Accumulated deficit | Retained earnings (negative) |
| Total shareholders’ equity | Total equity |
Labels from Apple’s Form 10-K, as translated in the book.
One Real Company
Apple’s Balance Sheet, 2021 to 2025
Five years, side by side. Read down a column to see one day. Read across a row to see the trend.
| Line | 2025 | 2024 | 2023 | 2022 | 2021 |
|---|---|---|---|---|---|
| Cash | 35,934 | 29,943 | 29,965 | 23,646 | 34,940 |
| Short-term investments | 18,763 | 35,228 | 31,590 | 24,658 | 27,699 |
| Accounts receivable | 72,957 | 66,243 | 60,985 | 60,932 | 51,506 |
| Inventory | 5,718 | 7,286 | 6,331 | 4,946 | 6,580 |
| Other current assets | 14,585 | 14,287 | 14,695 | 21,223 | 14,111 |
| Current assets | 147,957 | 152,987 | 143,566 | 135,405 | 134,836 |
| Net PP&E | 49,834 | 45,680 | 43,715 | 42,117 | 39,440 |
| Other long-term assets | 161,450 | 166,313 | 165,302 | 175,233 | 176,726 |
| Total assets | 359,241 | 364,980 | 352,583 | 352,755 | 351,002 |
| Accounts payable | 69,860 | 68,960 | 62,611 | 64,115 | 54,763 |
| Notes payable | 7,979 | 9,967 | 5,985 | 9,982 | 6,000 |
| Current portion of long-term debt | 12,350 | 10,912 | 9,822 | 11,128 | 9,613 |
| Other current liabilities | 75,442 | 86,553 | 66,890 | 68,757 | 55,105 |
| Current liabilities | 165,631 | 176,392 | 145,308 | 153,982 | 125,481 |
| Long-term debt | 78,328 | 85,750 | 95,281 | 98,959 | 109,106 |
| Other long-term liabilities | 41,549 | 45,888 | 49,848 | 49,142 | 53,325 |
| Total liabilities | 285,508 | 308,030 | 290,437 | 302,083 | 287,912 |
| Common stock and paid-in capital | 93,568 | 83,276 | 73,812 | 64,849 | 57,365 |
| Retained earnings and other equity | (19,835) | (26,326) | (11,666) | (14,177) | 5,725 |
| Total equity | 73,733 | 56,950 | 62,146 | 50,672 | 63,090 |
Source: Apple Form 10-K filings as summarized in the book. $ millions. Retained earnings alone: (14,264) in 2025, 5,562 in 2021.
The Method
How to Read It in 6 Steps
The same six steps work on Apple, Microsoft, or a ten-person shop.
Check the date.
A balance sheet is one day, not a year. AppleApple’s is the last Saturday of September. Compare the same date across years.rsquo;s is the end of its fiscal year in September. Compare the same date across years.
Read current assets.
Cash, short-term investments, receivables, inventory. This is money on hand or coming within a year. Apple’s inventory is just 1.4% of sales.
Read current liabilities.
Bills due within a year. Put them next to current assets. Apple owes $165.6 billion against $148.0 billion, a current ratio of 0.89.
Look at long-term debt.
Apple paid long-term debt down from $109.1 billion to $78.3 billion. Falling debt lowers risk and interest costs.
Read equity last.
Equity is what is left for owners. Apple’s is small for its size because of buybacks, and retained earnings sit below zero.
Turn lines into percentages.
Divide each line by total assets or sales. Apple’s liabilities fell from 82.0% to 79.5% of total assets.
The Line That Fools Beginners
Apple earned $112.0 billion in fiscal 2025 and shows negative retained earnings. That is not losses. Apple retires the shares it buys back and charges them against retained earnings. The full story is in what are retained earnings.
Compare It
Apple vs. Microsoft: Two Very Different Balance Sheets
| Latest fiscal year | Apple | Microsoft |
|---|---|---|
| Total assets | $359B | $619B |
| Cash + short-term investments | about $55B | about $95B |
| Long-term debt | $78B | $40B |
| Retained earnings | ($14B) | $238B |
| Total equity | $74B | $343B |
| Current ratio | 0.89 | 1.35 |
Microsoft’s fiscal year ends in June, Apple’s in September.
Both companies earn similar profits. Microsoft keeps its earnings on the books, so its equity is nearly five times Apple’s. Apple sends cash back to shareholders, so its equity stays thin. That gap drives several ratio differences later in the book.
Beginner Traps
What Do Beginners Get Wrong on a Balance Sheet?
- Reading it like a full year instead of one day.
- Panicking at negative retained earnings without asking why.
- Assuming more equity is always better.
- Skipping the percentages and comparing raw dollars.
- Missing that a company changed how it labels a line.
- Ignoring long-term debt because it is not due this year.
How the Book Grades Apple’s Balance Sheet
From the Book
Equity That Held Up Anyway
Balance Sheet · Total Equity
A Quiet Sign of Strength
Equity that holds up, even while a company is aggressively returning cash to shareholders, is a quiet sign of financial strength.
Cash, receivables, debt, equity, and every line between, with five years of Apple numbers and a grade for each.
Get the Book on Amazon →Your Own Balance Sheet
A small business balance sheet has the same three parts. Start with the owner version, what is a balance sheet. Applying for a loan? Lenders read your projected balance sheet the same way. Dr. Paul builds them in business plans.
Beyond the Book
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Balance Sheet Questions
What are the three parts of a balance sheet?
What is the difference between a balance sheet and an income statement?
What should I look at first on a balance sheet?
Why does Apple have negative retained earnings?
Keep Going
Related Guides
The balance sheet connects to every other statement. Start with the full guide to reading financial statements.
Written by Dr. Paul Borosky, DBA, MBA, business consultant, author, and adjunct finance instructor with an MBA focused in finance.
This page is for general educational purposes only. It is not investment, financial, tax, accounting, or legal advice, and nothing here is a recommendation to buy or sell any security. Apple and Microsoft figures come from their public filings as analyzed in the book. Apple and Microsoft are trademarks of their respective owners, and this page is not affiliated with or endorsed by either company.