financial-ratio-analysis

Provide reconciled income statement and balance sheet figures for one or more periods. The analysis computes profitability, turnover, liquidity, and leverage ratios, then flags each as healthy, warning, or critical against benchmarks and covenants.

DuPont analysis decomposes return on equity into net profit margin, asset turnover, and financial leverage. It reveals whether ROE is driven by real operating performance or merely by debt, which matters before treating a high ROE as good news.

Supply the covenant thresholds from your loan agreement, such as a minimum current ratio or DSCR. Each computed ratio is compared against those thresholds, and any breach is flagged critical with a handoff to covenant remediation analysis.

Service businesses have no inventory, so inventory turnover, inventory days, and the quick ratio are marked N/A rather than computed as meaningless values. All profitability, receivables, liquidity, and leverage ratios still apply normally.

When equity is zero or negative, dividing net income by equity produces a distorted or spurious percentage. The analysis reports ROE and leverage ratios as meaningless in that case and shifts focus to solvency indicators instead.

Use cash flow diagnosis when the question is about cash timing, such as being profitable but unable to pay bills. Ratio analysis measures overall financial health and structure, while cash-flow-diagnostic and working-capital-optimizer handle timing and trapped-cash problems.