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The purpose of the balance sheet is to report valuable information to decision-makers. The pieces of information that the balance sheet report are based on the company's assets, liabilities, and stockholders' equity. Through reporting these three pieces of information, a company can provide its financial situation to decision-makers.Also, with this information, analysts can use the balance sheet to determine the company's risk and future cash flow. so balance sheet can provide further details about the company's liquidity (the rate in which an asset can be converted to cash), solvency (the ability for a company to pay its debt), and financial flexibility (the ability to use cash for investments opportunities). Although the balance sheet can provide a wealth of information, it does have some limitations. One limitation of the balance sheet is that some assets and liabilities that are reported on the balance sheet may not be reported at its current fair value. For example, land is an asset that some companies can report at its historical cost. Because some assets and liabilities can be reported at its historical cost this result in the balance sheet being often criticized for not having accurate information and instead have misleading information. Another limitation of the balance sheet is that some companies use estimates and judgments when reporting certain items on the balance sheet. For example, a company can make estimates on the amount of account receivable it expects to collect however it's possible that the number they do end up collecting is way less than the estimate. As a result, some information on these items can be inaccurate on the balance sheet. One last limitation of the balance sheet is that it omits information that can be considered as a financial value but can not be recorded objectively. For example, a strong customer base can be considered an asset for some companies but because there is no reliable measurement for a customer base, companies are unable to report it on the balance sheet. These three limitations can often inaccurately provide the company financial situation.