The balance sheet provides a snapshot of a company’s financial position at a single point in time, showing assets, liabilities, and shareholders’ equity. It tells you what the company owns and owes, but it does not reveal how profitable the company has been over a period. While the balance sheet is a critical component of financial analysis — offering insight into liquidity, solvency, and capital structure — it doesn't track earnings or expenses over time. For that, you need the income statement. The balance sheet complements the income and cash flow statements, but its function is entirely different: it’s about financial standing, not performance. Confusing the balance sheet with the income statement could result in misinterpreting a company’s ability to generate profits, which is vital for assessing sustainability and growth potential.