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.

RELATED TERMS
  1. Balance Sheet

    A financial statement that summarizes a company's assets, liabilities ...
  2. Term Out

    The transfer of debt within a company's balance sheet without ...
  3. Off Balance Sheet - OBS

    An asset or debt that does not appear on a company's balance ...
  4. Common Size Balance Sheet

    A balance sheet that displays both the numeric value of all entries, ...
  5. Balance Sheet Reserves

    An amount expressed as a liability on the insurance company's ...
  6. Financial Statement Analysis

    The process of reviewing and evaluating a company's financial ...
Related Articles
  1. Forex Education

    Reading The Balance Sheet

    Learning to read the balance sheet can provide great insight into the financial strength of a company.
  2. Professionals

    Business: Balance Sheet and Income Statement

    Business: Balance Sheet and Income Statement
  3. Markets

    Fundamental Analysis: The Balance Sheet

    By Ben McClureInvestors often overlook the balance sheet. Assets and liabilities aren't nearly as sexy as revenue and earnings. While earnings are important, they don't tell the whole story. ...
  4. Investing Basics

    Comparing the P&L Statement and the Balance Sheet

    Basically, the balance sheet shows how much a company is worth, while the P&L statement reveals if a company is profitable or not.
  5. Investing Basics

    5 Tips For Reading A Balance Sheet

    If you know how to read it, the balance sheet provides valuable information on a potential investment.
  6. Forex Education

    1. The Balance Sheet Equation

    Learning to read the balance sheet can provide great insight into the financial strength of a company.
  7. Professionals

    Financial Statement Analysis

    Financial Statement Analysis
  8. Forex Education

    5 Tips For Reading A Balance Sheet

    The balance sheet, along with the income and cash flow statements, is an important tool for investors to gain insight into a company and its operations.
  9. Bonds & Fixed Income

    Evaluating A Company's Capital Structure

    Learn to use the composition of debt and equity to evaluate balance sheet strength.
  10. Professionals

    Balance Sheet Basics

    CFA Level 1 - Balance Sheet Basics. A brief look at balance sheets. Examines the various components of a balance sheet, such as assets, liabilities and shareholder equity.
RELATED FAQS
  1. What's the difference between an income statement and a balance sheet approach?

    Understand more about the principle purposes and primary differences between a company's income statement and its balance ... Read Answer >>
  2. 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 Answer >>
  3. What is the difference between a P&L statement and a balance sheet?

    Take a deeper look at the differences between the profit and loss statement and the balance sheet, two of the most important ... Read Answer >>
  4. What is the difference between a balance sheet and a cash flow statement?

    Understand the difference between a balance sheet and an income statement. Learn the three components of each of the financial ... Read Answer >>
  5. How are the three major financial statements related to each other?

    Learn why investors analyze a company's financial statements, and how the income statement, balance sheet and cash flow statement ... Read Answer >>
  6. On which financial statements does a company report its long-term debt?

    Discover which financial statements are used to report a company’s long-term debt, as well as how a company uses debt to ... Read Answer >>
Hot Definitions
  1. Law Of Demand

    A microeconomic law that states that, all other factors being equal, as the price of a good or service increases, consumer ...
  2. Cost Of Debt

    The effective rate that a company pays on its current debt. This can be measured in either before- or after-tax returns; ...
  3. Yield Curve

    A line that plots the interest rates, at a set point in time, of bonds having equal credit quality, but differing maturity ...
  4. Stop-Limit Order

    An order placed with a broker that combines the features of stop order with those of a limit order. A stop-limit order will ...
  5. Keynesian Economics

    An economic theory of total spending in the economy and its effects on output and inflation. Keynesian economics was developed ...
  6. Society for Worldwide Interbank Financial Telecommunications ...

    A member-owned cooperative that provides safe and secure financial transactions for its members. Established in 1973, the ...
Trading Center