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Business financial health: financial ratios

Enter the figures from your balance sheet and income statement and get a full diagnosis with the main financial ratios: liquidity, leverage, profitability and efficiency, with a traffic light for each ratio, an overall 0–10 score and your cash conversion cycle. Useful before applying for credit, bringing in a partner or planning the year.

Educational simulation. Not investment advice. Results are estimates based on the data you enter and do not replace advice from a qualified professional.

Reviewed on Oct 31, 2026

Use your latest balance sheet and the last 12 months of your P&L. Example values for a distributor.

What the business owns (assets)
What the business owes (liabilities)
Equity (assets − liabilities)—
Last 12 months (P&L)

No EBITDA at hand? Add income taxes, interest and depreciation back to net income.

Your inputs stay only on this browser and are not sent anywhere. Untick to delete them.

—Financial health score
—

Score by area

From 0 to 10 in liquidity, leverage, profitability and efficiency. The more the shape fills the chart, the more balanced the business.

Tap the chart to see the values.

Traffic light for each ratio

Score of each ratio. Green: within the healthy reference; yellow: between healthy and the risk limit; red: beyond the risk limit.

Tap the chart to see the values.

Cash conversion cycle: how many days cash is tied up

Days the product sits in inventory plus the days to collect from customers, compared with the credit suppliers give.

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Ratios

The summary lists your inputs, results, formulas, assumptions and sources. The full report also includes the charts and interpretations, in color. In the print dialog, choose Save as PDF.

Method, assumptions and sources

Formulas

Current ratio = current assets ÷ current liabilities; quick = (current assets − inventory) ÷ current liabilities; cash = cash ÷ current liabilities
Debt ratio = total liabilities ÷ total assets; net debt = loans − cash; interest coverage = EBIT ÷ interest
ROE = net income ÷ equity; ROA = net income ÷ total assets; asset turnover = net revenue ÷ total assets
Days on a 360-day year: receivable = receivables ÷ revenue × 360; inventory = inventory ÷ cost × 360; payable = payables ÷ cost × 360; cycle = receivable + inventory − payable
Ratio score: 10 in the healthy range, 6 at the warning limit, interpolated down to 0; overall score = average of the four areas

Assumptions and limits

  • Educational diagnosis with general references for small and mid-sized businesses; ideal values vary by industry (a grocery store has thin margins and high turnover; a manufacturer, the opposite).
  • Balance sheet figures at one date and results for the last 12 months; seasonality of balances, collateral and payment history are not considered.
  • References are general for small and mid-sized businesses and vary by industry. The diagnosis does not replace an accountant or a financial adviser.

Official sources and references

Frequently asked questions

What are financial ratios?

Simple divisions of balance sheet and income statement figures that show whether a business can pay its bills (liquidity), how much it relies on debt (leverage), how much it earns (profitability) and how well it uses its assets (efficiency). Lenders and investors use them to judge risk.

What is the current ratio?

Current assets divided by current liabilities. Above 1, the business has more to collect or in cash within a year than it has to pay in the same period. This calculator treats 1.5 or more as healthy and below 1.0 as a warning sign.

How do I read the default example?

The distributor in the example scores 7.4 out of 10, in the warning range. Its strongest area is profitability (8.0) and its weakest is efficiency (6.0). Two ratios are at risk: the 98-day cash conversion cycle and the cash ratio. That cycle ties up about $147,000 of working capital, and every 10 days less would free up $15,000.

How do I know if the business has too much debt?

Look at the debt ratio (liabilities ÷ assets), net debt relative to EBITDA and interest coverage (EBIT ÷ interest). Net debt above 3 times EBITDA or coverage below about 2 are common warning signs for lenders.

What is ROE and what is a good value?

Return on equity: net income divided by shareholders’ equity. It shows what the owners earn on the capital they keep in the business. Compare it with a safe investment: an ROE below the yield of government bonds means the risk of the business is not being rewarded.

Are the ideal values the same for every business?

No. They vary a lot by industry: retailers run thin margins and high turnover, manufacturers the opposite, and service firms carry little inventory. The most useful comparison is the business against its own past years and against peers in the same industry.

Does the score replace an accountant or a credit review?

No. It uses general references for small and mid-sized businesses and ignores collateral, payment history and forecasts. Use it to find weak points and discuss them with your accountant or a financial adviser before major decisions.

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Financial ratios: how to read your business’s health

Financial ratios sum up, in a few numbers, whether a business can pay its bills, how much it depends on debt, how much it earns and how efficiently it uses its resources. Banks and investors look at these numbers before lending or buying in.

The four groups of ratios

GroupRatioFormula
LiquidityCurrent ratiocurrent assets ÷ current liabilities
LiquidityQuick ratio(current assets − inventory) ÷ current liabilities
LeverageDebt ratiototal liabilities ÷ total assets
LeverageInterest coverageEBIT ÷ interest expense
ProfitabilityROEnet income ÷ equity
ProfitabilityNet marginnet income ÷ net revenue
EfficiencyCash conversion cycledays receivable + days inventory − days payable

General references

  • Current ratio above 1: what the business will collect in the short term covers what it must pay. Below that, cash may run short.
  • Interest coverage above 3: operating profit pays interest comfortably.
  • ROE above the cost of money: if it is lower than a safe bond yield, the owners would earn more investing elsewhere.
  • Short cash cycle: the fewer days the business finances customers and inventory, the less working capital it needs.

Benchmarks vary by industry

A grocery store has thin margins and high turnover; a manufacturer, higher margins and lower turnover; a service firm has almost no inventory. That is why the references are approximate, and the most useful comparison is the business against itself over time and against competitors in the same industry.

Where to find the numbers

On the balance sheet and the income statement prepared by your accountant. Use the last closed fiscal year or the last 12 months. The calculator’s overall score is the average of the four areas and helps you find the weakest point to tackle first.