Clean Balance Sheet

DEFINITION of 'Clean Balance Sheet'

A company's financial statement that summarizes its assets, liabilities and shareholder equity, and where the company is shown to have very little or no debt. A clean balance sheet indicates the company has no significant debt during the statement period. A company that has a lot of debt may be advised to "clean up its balance sheet" in order to become more attractive to investors.

BREAKING DOWN 'Clean Balance Sheet'

A clean balance sheet is challenging to maintain, especially for businesses that derive a significant percentage of yearly revenues from seasonal activity. Many investors find companies with clean balance sheets attractive because the minimal leverage reduces downside risks.

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RELATED FAQS
  1. Does the balance sheet always balance?

    Yes, a balance sheet should always balance. The name "balance sheet" is based on the fact that assets will equal liabilities ... Read Full Answer >>
  2. When does a growth stock turn into a value opportunity?

    A growth stock turns into a value opportunity when it trades at a reasonable multiple of the company's earnings per share ... Read Full Answer >>
  3. What items are considered liquid assets?

    A liquid asset is cash on hand or an asset that can be readily converted to cash. An asset that can readily be converted ... Read Full Answer >>
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    When analyzing financial fitness, corporate accountants and investors alike closely examine a company's financial statements ... Read Full Answer >>
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    Expressed as a percentage, the debt-to-equity ratio shows the proportion of equity and debt a firm is using to finance its ... Read Full Answer >>
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