Clean Balance Sheet

AAA

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.

INVESTOPEDIA EXPLAINS '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.

RELATED TERMS
  1. Unconsolidated Subsidiary

    A company that is owned by a parent company, but whose individual ...
  2. Senior Stretch Loan

    A specific type of loan to a business entity, which possesses ...
  3. Accountant

    A professional person who performs accounting functions such ...
  4. Balance Sheet

    A financial statement that summarizes a company's assets, liabilities ...
  5. Black

    A description of a positive balance on a company's financial ...
  6. Debt

    An amount of money borrowed by one party from another. Many corporations/individuals ...
Related Articles
  1. Fundamental Analysis

    How To Decode A Company's Earnings Reports

  2. Investing Basics

    Reading The Balance Sheet

  3. Personal Finance

    Breaking Down The Balance Sheet

  4. The cash conversion cycle (CCC) is one of several measures of management effectiveness.
    Investing Basics

    Understanding The Cash Conversion Cycle

Hot Definitions
  1. Capitulation

    When investors give up any previous gains in stock price by selling equities in an effort to get out of the market and into ...
  2. Turkey

    Slang for an investment that yields disappointing results or turns out worse than expected. Failed business deals, securities ...
  3. Conduit Issuer

    An organization, usually a government agency, that issues municipal securities to raise capital for revenue-generating projects ...
  4. Financing Entity

    The party in a financing arrangement that provides money, property, or another asset to an intermediate entity or financed ...
  5. Hyperinflation

    Extremely rapid or out of control inflation. There is no precise numerical definition to hyperinflation. Hyperinflation is ...
  6. Gross Rate Of Return

    The total rate of return on an investment before the deduction of any fees or expenses. The gross rate of return is quoted ...
Trading Center