Financial Ratio
Calculator

A financial ratio calculator computes key financial metrics (liquidity, profitability, leverage, and activity ratios) from balance sheet and income statement data. Under ISA 520, auditors are required to perform analytical procedures as part of the overall review near the end of the audit. ISA 520.A1 specifically names 'gross margin percentages' and 'ratio of sales to accounts receivable' as examples. This calculator automates the computation of 30+ ratios, compares them against European industry benchmarks from the BACH database, and flags going concern indicators under ISA 570.A3.

The Altman Z-Score predicts the probability of bankruptcy using five financial ratios weighted by coefficients derived from statistical analysis. Three variants exist: the Original Z-Score (Z = 1.2×WC/TA + 1.4×RE/TA + 3.3×EBIT/TA + 0.6×MVE/TL + 1.0×Sales/TA) for publicly traded manufacturing companies, the Z'-Score for private companies (substitutes book value of equity for market value with adjusted coefficients), and the Z''-Score for non-manufacturing/services companies (removes asset turnover entirely). Use the original for listed manufacturers, Z' for private companies, and Z'' for service firms. Never apply any variant to banks or insurance companies.

The BACH (Bank for the Accounts of Companies Harmonized) database at bach.banque-france.fr is maintained by the ECB/ECCBSO and provides aggregated financial ratios for companies across 12 European countries. Data is broken down by NACE sector, company size class, and country, with quartile distributions (Q1, median, Q3). This calculator uses pre-extracted BACH benchmarks for 14 industries to provide automatic RAG (Red/Amber/Green) comparison. Benchmarks are updated annually and represent European averages; local conditions may differ.

All ratio calculations include division-by-zero protection. When a denominator is zero, the ratio displays 'N/A' rather than crashing or showing infinity. Negative equity is flagged as 'technically insolvent' with specific warnings on debt-to-equity and ROE calculations. Negative EBITDA triggers a warning that debt can't be serviced from operations. For service companies with no inventory, inventory-related ratios are hidden and Quick Ratio equals Current Ratio. Zero revenue suppresses all margin ratios.

The current ratio (Current Assets / Current Liabilities) measures overall short-term liquidity including all current assets. The quick ratio ((Current Assets − Inventory − Prepaid Expenses) / Current Liabilities) is more conservative because it excludes inventory and prepaid expenses, assets that can't be quickly converted to cash. For manufacturing companies with significant inventory, the difference between these ratios is substantial and diagnostic. For service companies with minimal inventory, the two ratios will be similar.

This calculator checks nine quantitative indicators derived from ISA 570.A3: negative working capital, current ratio below 1.0, negative equity, operating loss, net loss, interest coverage below 1.5x, negative EBITDA, debt-to-equity exceeding 3.0x, and debt service coverage below 1.0x. Triggering one or more indicators doesn't automatically mean the entity can't continue as a going concern. It means further investigation is required. The auditor must consider mitigating factors: management plans, available financing, seasonal patterns, and the entity's track record of addressing similar conditions.

The cash conversion cycle (CCC = DSO + Inventory Days − DPO) measures how many days it takes to convert inventory purchases into cash from customers. A shorter CCC indicates more efficient working capital management. An increasing CCC year-over-year may indicate deteriorating collection performance, slow-moving inventory, or loss of supplier payment terms, all of which are relevant for ISA 520 analytical procedures and may flag liquidity concerns under ISA 570. For retail companies, a negative CCC is common (they collect cash before paying suppliers).

Yes. The calculator provides a CSV export function that downloads all calculated ratios along with industry benchmark Q1, median, and Q3 values where available. The CSV file is formatted for easy import into Excel or audit software. For a complete audit working paper, combine the CSV output with the narrative interpretation of key ratios and any flagged going concern indicators.

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