The balance sheet
The balance sheet is a snapshot of one day: everything owned, everything owed, and what is left for the owners.
Both sides always match
What is owned (assets) always equals what is owed (debts) plus what belongs to the owners (equity). That is why it is called a balance sheet.
The café on 31 December
The café owns €50,000: ovens, tables, stock and cash. It owes €20,000 on a bank loan. The owners' part, its equity, is €30,000.
Borrowing moves both sides
If the café borrows €10,000 to buy another oven, it owns €10,000 more and owes €10,000 more. Equity does not change. Only profit, or the owners putting money in or taking it out, changes equity.
What to look for
How much is borrowed compared with what is owned, and how much cash there is to pay what is due soon. A balance sheet heavy with debt has little room if sales fall.