Introduction to the Balance Sheet
The balance sheet, known in Arabic as قائمة المركز المالي or الميزانية, provides a financial snapshot of a company at a specific point in time. Unlike an income statement, which reports financial activity over a period like a quarter or a Fiscal year, a balance sheet shows what a company owns and what it owes on a single date, such as December 31.
For investors on the Egyptian Exchange (EGX), understanding the balance sheet is essential for evaluating financial stability, capital structure, and liquidity. It reveals whether a business relies heavily on debt or relies primarily on capital provided by its shareholders.
The Core Accounting Equation
Every balance sheet is built upon a fundamental accounting formula:
Assets = Liabilities + Equity
This balance must always hold true. The total resources controlled by the company (Total assets) are funded by two sources: money owed to outside creditors (Total liabilities) and funds belonging to the owners (Shareholders' equity).
Breakdown of the Components
- Total assets: Everything of value that the business owns or controls. Assets are split into current assets (cash, inventory, and accounts receivable expected to convert to cash within a year) and non-current assets (property, machinery, long-term investments, and intangible assets).
- Total liabilities: Outstanding financial obligations owed to third parties. Liabilities are classified as current liabilities (debts and obligations due within one year, such as supplier payments) and non-current liabilities (long-term bank loans and bonds).
- Shareholders' equity: Also called net worth, this represents the remaining value left for shareholders after subtracting all liabilities from total assets. It includes paid-in share capital, legal reserves, and retained earnings built up over time.
To find the net book value attributable to equity holders, you simply subtract total liabilities from total assets. Equity is what truly belongs to the business owners.
Reading Balance Sheets in Practice: EGX Examples
To see how the accounting equation works in real financial reports, let us look at three prominent companies listed on the EGX. Most listed corporations report on a Consolidated and standalone statements basis, which combines the financial position of the parent company and its subsidiaries.
Telecom Sector: Telecom Egypt
Telecom Egypt operates in the telecommunications and technology sector, maintaining substantial infrastructure investments across Egypt.
For FY 2021, Telecom Egypt reported total assets of 90.68 billion EGP, with total liabilities reaching 46.35 billion EGP and total equity at 44.33 billion EGP.
By FY 2024, the company recorded total assets of 198 billion EGP. At the same point, total liabilities stood at 152 billion EGP, while total equity closed at 45.94 billion EGP.
| Telecom Egypt · Annual · EGP | 2021 | 2022 | 2023 | 2024 | 2025 |
|---|---|---|---|---|---|
| Total assets | 90.68 billion | 120 billion | 151 billion | 198 billion | 226 billion |
| Total liabilities | 46.35 billion | 73.63 billion | 99.76 billion | 152 billion | 162 billion |
| Shareholders' equity | 44.33 billion | 46.27 billion | 50.88 billion | 45.94 billion | 63.69 billion |
Industrial Sector: Abou Kir Fertilizers
Abou Kir Fertilizers operates in the basic materials sector. Industrial manufacturers often carry significant non-current physical assets, alongside working capital reserves to support operational cycles.
In FY 2021, Abou Kir Fertilizers held total assets of 10.85 billion EGP. Its total liabilities were 2.49 billion EGP, leaving total equity at 8.36 billion EGP.
By FY 2024, total assets reached 42.31 billion EGP. Total liabilities were reported at 9.19 billion EGP, while total equity reached 33.12 billion EGP.
Notice how in each year, subtracting 9.19 billion EGP from 42.31 billion EGP leaves exactly 33.12 billion EGP. This residual balance represents the true net assets belonging to shareholders.
Real Estate Sector: TMG Holding
TMG Holding is a major real estate developer. Real estate companies frequently hold substantial long-term assets, operational land banks, and large balance sheet liabilities related to customer advances and development loans.
In FY 2020, TMG Holding listed total assets of 118 billion EGP. Total liabilities were 84.28 billion EGP, and total equity was 33.62 billion EGP.
By FY 2024, TMG Holding expanded its balance sheet, reporting total assets of 357 billion EGP, total liabilities of 225 billion EGP, and total equity of 131 billion EGP.
Key Metrics Derived from the Balance Sheet
While the raw numbers show scale, analysts evaluate liquidity and financial leverage by calculating key ratios directly from balance sheet line items:
- Liabilities-to-equity ratio: Calculated by dividing total liabilities (or total debt) by total equity. It measures how much debt a business uses to finance its assets relative to shareholder capital.
- Return on assets (ROA): Calculated by taking net profit from the income statement and dividing it by total assets. It evaluates how efficiently management utilizes its asset base to generate earnings.
- Return on equity (ROE): Calculated by dividing net profit by total equity, showing the return generated on the capital invested by shareholders.
What to Look for When Analyzing a Balance Sheet
When reviewing balance sheets on AskBorsa Academy, consider these key practical checks:
- Asset Quality and Composition: Check whether assets are primarily cash and liquid receivables or heavy physical land and equipment.
- Debt Structure: Compare short-term debt due within a year against long-term obligations to assess near-term refinancing risks.
- Equity Growth: Track whether total equity grows steadily year-over-year (Year-on-year growth), indicating retained profits reinvested into the business.
- Working Capital Health: Ensure current assets comfortably exceed current liabilities so the company can cover immediate operating obligations without selling long-term assets.
