The balance sheet provides information about liquidity, solvency, flexibility and financial structure. Which option is true?

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The balance sheet is a snapshot of a company’s financial position, and it directly informs measures of liquidity, solvency, financial structure, and flexibility. Liquidity looks at the ability to meet short-term obligations, which you see from current assets versus current liabilities and indicators like working capital. Solvency considers long-term viability, shown by long-term liabilities relative to equity. Financial structure is about how the business is financed—the mix of debt and equity—and the balance sheet lays out liabilities and shareholders’ equity so you can assess leverage and capitalization. Flexibility refers to how easily the company can respond to opportunities or stresses, which comes from available resources, cash holdings, and debt capacity reflected on the balance sheet.

Revenue and expenses for a period appear on the income statement, not the balance sheet. Cash flows are reported on the cash flow statement, though the balance sheet does show cash and cash equivalents as of a date. Investor opinions aren’t part of the financial statements.