How do you read a balance sheet?

Most UK balance sheets run from top to bottom in this order, adding and taking away until they reach net assets.

The profit and loss account covers a whole year. The balance sheet is a snapshot of one day: the last day of the financial year. It shows what the company owns, what it owes, and the difference between the two.

Everything a company owns is an asset: its buildings and equipment, its stock, the money customers still owe it, and its cash. Everything it owes is a liability: bills from suppliers, tax, loans, and the rent it has signed up to pay on leased property.

Both are split by time. Current means due or usable within a year; non-current (or fixed, or long-term) means longer than that. Comparing current assets with current liabilities shows whether what the company already has, or is owed, covers the bills due within a year.

Take liabilities away from assets and you get net assets. The bottom half of the balance sheet, equity, explains where that figure came from: the money shareholders paid in for their shares, plus the profits the company has kept over the years (retained earnings). The two halves are always equal.

Greggs' group balance sheet at 27 December 2025 shows £1,288m of fixed assets and £195.9m of current assets, a total of £1,484m. Against that it owed £347.7m due within a year and £511.1m due later, £858.8m in all. That leaves net assets of £625.2m, up from £570.5m a year earlier.

Most of what Greggs owns is its shops and bakeries. Property, plant and equipment rose from £664.7m to £832.1m in the year, with £263.3m spent on new property and equipment. A further £413.0m is right-of-use assets: mostly the shops it rents, which accounting rules now put on the balance sheet. The matching debt, £449.8m of lease liabilities, is the rent it has agreed to pay on them in future years, discounted to today's money.

Greggs owes more within a year (£347.7m) than it has in current assets (£195.9m). That is normal for a business where customers pay at the till and suppliers are paid weeks later: the cash arrives before the bills are due. Cash fell from £125.3m to £70.8m, and Greggs had £25.0m of borrowings at the year end, against none a year earlier.

Net assets grew by £54.7m. The statement of changes in equity shows why: the year's profit after tax of £122.2m, less £70.3m paid to shareholders as dividends, plus small items for share schemes and pensions. Profit the shareholders leave in the company adds to net assets; dividends take it out.

Yes. Negative net assets (net liabilities) mean that, at book values, the company owes more than it owns. It does not mean it cannot pay its bills. What matters day to day is whether cash keeps coming in to meet debts as they fall due, and many companies with net liabilities trade profitably for years.

Domino's Pizza Group is one. Its group made £81.1m of pre-tax profit in the year to 28 December 2025, yet its balance sheet shows a shareholders' deficit of £88.3m, after accumulated losses of £146.2m. The notes explain that, in line with its capital distribution policy, the group has paid excess cash out to shareholders, and its net liability position grew from £82.2m to £88.9m including a small minority interest. The directors still prepared the accounts on a going concern basis.

Common reasons for net liabilities: paying out more in dividends and share buybacks than the company has kept as profit; a company that has borrowed to fund a buyout or a payout to its owners, where the debt sits on its own balance sheet but the brand it built up over years does not; heavy losses while a young company grows; and leases, where the lease liability can run ahead of the matching asset. A brand, a customer base or a skilled workforce is worth a lot, but a company cannot usually put a value on one it built itself.

Net liabilities are worth a closer look, not a verdict. Check the cash, the debts due within a year, and what the directors and auditors say under going concern.

Net assets are a book value, not a price. Most assets are shown at what they cost, less wear and tear (depreciation), not what they would sell for. A company's market value can be far above or below its net assets.

Compare current assets with current liabilities. If short-term bills are much bigger than stock, receivables and cash, ask how the gap is filled. For a cash-at-the-till business like Greggs it is normal; for a company that waits months to be paid it can be a warning.

Read the two years side by side. The balance sheet shows the year before too. A fall in cash, a jump in borrowings or a rise in what customers owe tells you more than any single figure.

Look for leases. Since 2019, companies using international accounting standards show rented property as an asset with a lease liability, and companies using UK standards have done the same for years starting from 1 January 2026. Retailers and restaurant chains can show hundreds of millions of pounds of both.

It usually comes straight after the profit and loss account. Companies using international accounting standards may call it the statement of financial position. UK groups show two: one for the whole group and one for the parent company alone, sometimes side by side in the same table, as Greggs does.

Almost every company has to file a balance sheet at Companies House, even the smallest; the main exceptions are some unlimited companies and dormant subsidiaries backed by their parent. Small and micro companies can leave out the profit and loss account, so for many private companies the balance sheet is the only financial page that is public. Every Spark Intel profile shows net assets and cash and links to the exact filing they come from.