Karpeo · Business in Switzerland
The Swiss balance sheet explained: structure and worked example
A balance sheet shows what your business holds and how it is financed at a particular date. This worked Swiss example explains the structure and gives you a practical way to read the figures before approving your accounts.
By Sarah Prieur · Swiss certified public accountant
Assets, liabilities and equity
The balance sheet is a snapshot of the company’s financial position. Assets include cash, customer invoices, inventory and equipment. Financing comprises liabilities and equity.
Assets = liabilities + equity. Equity is the accounting difference between assets and debts; it is not necessarily cash available in the bank. The French term passif covers both liabilities and equity, so translating it simply as “debts” would be misleading.
Balanced totals follow from accounting mechanics. They do not prove that assets are recoverable or that the business can pay its bills.
Why an entrepreneur should read the balance sheet
Use it when planning investments, discussing finance and monitoring money tied up in the business. Rising customer balances may prompt a lender to ask about collection. The figures can also reveal approaching loan maturities or slow-moving stock.
Read it alongside the income statement, which explains revenue and expenses over a period. A CHF 30,000 profit does not mean that cash increased by CHF 30,000. Notes to the annual accounts add accounting policies, commitments and relevant events after year-end.
When preparing a business plan, connect expected profit with assets, debt and cash rather than treating them as interchangeable.
The Swiss presentation requirements
Article 959a of the Code of Obligations sets the minimum balance-sheet structure. Presentation may be tabular or in a list, and annual accounts must include prior-year comparatives.
Assets start with more liquid resources. Financing presents nearer-term obligations before longer-term liabilities and equity. Adapt labels to the business while retaining the required distinctions.
| Section | Typical items | Practical question |
|---|---|---|
| Current assets | Cash, receivables, stock and prepayments | What supports the current operating cycle? |
| Non-current assets | Equipment, investments and long-term loans | What is committed for the longer term? |
| Current liabilities | Suppliers, VAT, social liabilities and near-term maturities | What must be paid soon? |
| Non-current liabilities | Long-term borrowings and obligations | How are longer-term investments financed? |
| Equity | Capital, reserves and accumulated results | What remains after deducting liabilities? |
Swiss SA/AG corporations and LLCs (Sàrl/GmbH) prepare annual accounts even at low turnover. Simplified rules may apply to a sole proprietorship below the CHF 500,000 legal threshold. The accounting rules for sole proprietorships and partnerships explain that scope.
A simplified LLC balance sheet
This educational example is at 31 December, in CHF. Zero-balance items are omitted. Actual annual accounts also include comparatives and company-specific disclosures.
| Assets | CHF | Liabilities and equity | CHF |
|---|---|---|---|
| Bank | 35,000 | Trade payables | 25,000 |
| Trade receivables | 45,000 | Tax and social-insurance liabilities | 10,000 |
| Inventory | 30,000 | Accrued liabilities | 5,000 |
| Prepayments and accrued income | 5,000 | Long-term loan | 50,000 |
| Equipment, net carrying amount | 85,000 | Share capital | 20,000 |
| Retained-earnings reserves | 40,000 | ||
| Profit brought forward | 20,000 | ||
| Profit for the year | 30,000 | ||
| Total | 200,000 | Total | 200,000 |
The company has CHF 200,000 in recorded assets, financed by CHF 90,000 liabilities and CHF 110,000 equity. Only CHF 35,000 is cash; the rest is tied up in receivables, stock and equipment, among other items.
The CHF 85,000 equipment figure is its net carrying amount after depreciation, neither original purchase cost nor a guaranteed resale value. Likewise, share capital is not the same as total equity or cash.
Read the balance sheet in five steps
- Check the date and comparison. A December balance sheet may not explain a March cash shortage. For seasonal businesses, compare similar periods.
- Match cash with upcoming payments. Here, CHF 35,000 cash faces CHF 40,000 current liabilities. That alone does not prove a problem: customers may pay before suppliers are due. Examine the timing.
- Assess asset quality. Will the CHF 45,000 receivables be collected? Is the CHF 30,000 inventory saleable? Carrying amounts need evidence.
- Examine financing. Funding a machine used for years with very short-term debt can create pressure. Match long-term investment and stable finance.
- Monitor equity. Here the equity ratio is 110,000 ÷ 200,000 = 55%. Compare it with past periods and the sector; no single ratio guarantees financial health.
If losses materially weaken equity, examine capital loss and over-indebtedness separately from day-to-day liquidity.
Why transactions preserve the balance
A CHF 10,000 customer payment increases the bank and reduces receivables equally. Total assets remain unchanged.
A new CHF 20,000 loan increases cash and liabilities equally. Starting from the example, the total rises from CHF 200,000 to CHF 220,000. The business has more cash but has not earned profit from borrowing.
CHF 5,000 depreciation reduces equipment and profit, and therefore equity, by CHF 5,000 before any tax effect. These are separate illustrations starting from the same base.
An omitted supplier invoice can leave totals balanced while liabilities and expenses are understated. Equality is necessary, but completeness and valuation still require checks.
Checks before approving annual accounts
During year-end closing, ask for support for significant balances. Each should connect to a list, statement or calculation.
| Balance | Supporting document |
|---|---|
| Bank | Closing-date statement and reconciliation |
| Customers | Open-invoice list and ageing |
| Inventory | Count and valuation method |
| Equipment | Acquisition and depreciation schedule |
| Loans | Lender statement and repayment schedule |
| Tax and social liabilities | Returns, instalments and closing calculations |
Also review shareholder loans, unbilled expenses and significant year-on-year changes. An unexplained increase warrants a question even when profit looks satisfactory. Apply the Swiss accounting principles consistently when reviewing valuations and supporting estimates.
Sales records from invoicing software help support receivables, but invoicing alone does not produce a complete balance sheet. Reconcile relevant VAT balances with the annual VAT reconciliation.
Frequently asked questions
How does a balance sheet differ from a trial balance?
The trial balance lists balances across all ledger accounts. The balance sheet presents assets, liabilities and equity in a structured form, while the income statement presents revenue and expenses.
Does profit appear in the balance sheet?
Yes. The current-year result forms part of equity. The income statement explains how that result arose during the period.
Does a balanced balance sheet show that a company is healthy?
No. Equality follows from accounting mechanics. Assess maturities, recoverability, profitability and ability to pay debts as well.
Can a balance sheet be prepared monthly?
Yes. Interim management accounts are useful when receivables, payables, stock and material accruals are updated rather than left until year-end.
Must share capital stay in the bank?
After incorporation, released funds can finance lawful company expenditure and investment. Capital remains in equity but does not require an identical cash balance.
Sources and references
About the author
Sarah Prieur
Sarah Prieur is a Swiss certified public accountant and a partner at Karpeo. She supports entrepreneurs, self-employed professionals and SMEs with accounting, tax and business decisions in Switzerland.
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