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. Balance Sheet

    A financial statement that summarizes a company's assets, liabilities ...
  4. Debt

    An amount of money borrowed by one party from another. Many corporations/individuals ...
  5. Black

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

    A professional person who performs accounting functions such ...
Related Articles
  1. Fundamental Analysis

    How To Decode A Company's Earnings Reports

    Read between the lines to decipher a company's true financial condition.
  2. Investing Basics

    Reading The Balance Sheet

    Learn about the components of the statement of financial position and how they relate to each other.
  3. Personal Finance

    Breaking Down The Balance Sheet

    Knowing what the company's financial statements mean will help you to analyze your investments.
  4. Investing Basics

    Understanding The Cash Conversion Cycle

    Find out how a simple calculation can help you uncover the most efficient companies.
  5. Investing Basics

    How To Evaluate A Company's Balance Sheet

    Asset performance shows how what a company owes and owns affects its investment quality.
  6. Investing

    Off-Balance-Sheet Entities: An Introduction

    The theory and practice of these entities varies greatly. Investors need to learn what they're getting into.
  7. Markets

    Cash: Can A Company Have Too Much?

    Cash is something companies love to have. But if they are not using it there could be problems.
  8. Forex

    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 and equity every time. The assets on the balance sheet consist of ...
  9. Investing

    What Happened To Obama’s Amnesty Bill?

    The sweeping Republican majorities were supposed to trigger change, but now they are preparing to embrace the Obama immigration policy.
  10. Fundamental Analysis

    What's a Prospectus?

    The Security and Exchange Commission (SEC) requires that any company raising money from potential investors through the sale of securities must file a prospectus with the SEC and then provide ...

You May Also Like

Hot Definitions
  1. Portfolio Turnover

    A measure of how frequently assets within a fund are bought and sold by the managers. Portfolio turnover is calculated by ...
  2. Commercial Paper

    An unsecured, short-term debt instrument issued by a corporation, typically for the financing of accounts receivable, inventories ...
  3. Federal Funds Rate

    The interest rate at which a depository institution lends funds maintained at the Federal Reserve to another depository institution ...
  4. Fixed Asset

    A long-term tangible piece of property that a firm owns and uses in the production of its income and is not expected to be ...
  5. Break-Even Analysis

    An analysis to determine the point at which revenue received equals the costs associated with receiving the revenue. Break-even ...
  6. Key Performance Indicators - KPI

    A set of quantifiable measures that a company or industry uses to gauge or compare performance in terms of meeting their ...
Trading Center