A balance sheet answers two related questions: what resources does the business hold, and how are they financed? Assets show those resources. Liabilities and equity show their financing. If your Swiss accounts are in French, these two sides are labelled actif and passif.
At a glance
- A balance sheet is prepared at a specific date, usually the end of the financial year.
- Assets are divided into current and non-current assets.
- The financing side contains liabilities and equity.
- The equation is: assets = liabilities + equity. Equity must not be added a second time to the total financing side.
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Assets: where are the resources invested?
Business assets (in French) include cash, unpaid customer invoices, inventories, machinery and certain rights. Recognition requires the conditions in the Swiss Code of Obligations to be met, including expected economic benefits and a value that can be estimated sufficiently reliably.
Current assets
These include cash and assets likely to be realised within twelve months of the reporting date or within the normal operating cycle. Trade receivables and inventories are common examples.
A receivable is not money in the bank. Review its value and due date, especially when a customer disputes the invoice or faces financial difficulties.
Non-current assets
These support the business over the longer term: equipment, vehicles, buildings, certain investments and intangible assets. A machine used in a workshop has a different role from one bought for resale.
Our article on non-current assets (in French) explains the distinction. Their balance sheet values reflect the necessary depreciation and valuation adjustments.
Liabilities and equity: where does the funding come from?
Liabilities
Liabilities are obligations to third parties: suppliers, banks, social insurance institutions and other creditors. They are classified by maturity. The portion of a loan repayable within twelve months needs to be assessed as a current liability.
The liabilities side of the accounts (in French) also includes relevant accruals and provisions. Distinguish an accrued expense attributable to a known period from a provision addressing a specific uncertainty.
Equity
Depending on the legal structure, equity includes capital, reserves and accumulated profits or losses. It is the difference between assets and liabilities.
Equity is not a separate bank account. A Swiss LLC can have CHF 20,000 in registered share capital while having used the money for equipment or day-to-day operations.
A simplified Swiss balance sheet example
On mobile, scroll the table horizontally to see all columns.
| Assets | CHF | Liabilities and equity | CHF |
|---|---|---|---|
| Cash and cash equivalents | 20’000 | Trade payables | 15’000 |
| Trade receivables | 25’000 | Other current liabilities | 10’000 |
| Inventories | 15’000 | Long-term loan | 25’000 |
| Net non-current assets | 40’000 | Capital and reserves | 40’000 |
| Profit for the year | 10’000 | ||
| Total | 100’000 | Total | 100’000 |
The business holds CHF 100,000 in assets, financed by CHF 50,000 in liabilities and CHF 50,000 in equity. Adding equity again to the CHF 100,000 financing total would count it twice.
Why does a balance sheet balance?
Under double-entry bookkeeping (in French) , every transaction has equal total debits and credits. Receiving a CHF 10,000 loan, for example, increases the bank balance and liabilities by the same amount.
Profit increases equity before any other movements. At the start of the next financial year, balance sheet balances are carried forward, while the income statement records the new period’s activity.
Arithmetic balance does not guarantee financial health. Losses can reduce equity, or make it negative, while the accounts continue to balance.
A loan increases both sides of the balance sheet
Take our CHF 100,000 balance sheet, financed by CHF 50,000 in liabilities and CHF 50,000 in equity. A CHF 10,000 loan is paid into the bank account. Assets rise to CHF 110,000. Liabilities increase to CHF 60,000 and equity remains at CHF 50,000. The balance sheet still balances: 110,000 = 60,000 + 50,000. The business has more cash, but it has not earned CHF 10,000 in profit.
What can you learn from a balance sheet?
It helps you assess liquidity, financing and the composition of assets. You can calculate financial ratios (in French)and examine working capital requirements (in French). Return on equity also requires profit for the period.
A current ratio above 1 does not guarantee that bills can be paid on time: inventory may be difficult to sell and customers may pay late. For a deeper review, read our approach to balance sheet analysis (in French) and supplement it with cash flow forecasts.
Base your decisions on a reliable balance sheet
A useful balance sheet needs up-to-date figures: receivables that can realistically be collected, correctly valued inventories and identified liabilities. Looking beyond the equality of the two sides helps you understand resources, commitments and the role of equity.
Our accounting support helps you prepare reliable accounts and understand their key messages. That gives you a practical basis for closing the year, discussing financing or planning an investment with a clearer picture of your Swiss business.
Frequently asked questions
Is equity included in the passif of a Swiss balance sheet?
Yes. In French-language Swiss accounts, passif means the financing side, comprising liabilities and equity. In English, “liabilities” alone does not include equity.
Is an asset always a physical object?
No. A receivable or a right that meets the recognition criteria can also be an asset.
What is the difference between a balance sheet and an income statement?
A balance sheet describes the financial position at a date. An income statement measures income and expenses over a period. Our comparison explains how they connect.
Sources and references
Romain Prieur is a Swiss-qualified accountant and founder of Entreprendre.ch. With more than ten years of experience in audit and business advisory in Switzerland, he advises entrepreneurs on company formation, accounting and taxation.
