Financial Data
Enter the essential financial figures below. Expand the additional sections for a comprehensive analysis.
Financial Ratio Analysis Guide for European Auditors — free PDF
ISA 520 & ISA 570 practical workbook: all formulas with visual explanations, industry benchmark reference tables from BACH for 15 industries, ratio interpretation guide, and template narrative paragraphs for audit working papers.
No spam. Unsubscribe anytime.
ISA 520.5 — Design and perform analytical procedures near the end of the audit that assist in forming an overall conclusion.
ISA 520.A1 — Analytical procedures may include ratios such as gross margin percentages and ratio of sales to accounts receivable.
ISA 570.A3 — Negative working capital, adverse key financial ratios, operating losses, and other indicators may cast doubt on going concern.
Financial Ratio Analysis for Healthcare
Healthcare financial ratio analysis must account for the sector's mixed funding models (public subsidies, insurance reimbursements, patient payments), regulatory compliance costs, and public interest sensitivity. Healthcare entities range from publicly funded hospitals to private pharmaceutical companies, each requiring different ratio interpretation. For publicly funded healthcare, total expenditure-based ratios are more meaningful than profitability ratios, while private healthcare groups benefit from standard profitability analysis.
The program expense ratio (programme costs / total expenditure) is a critical metric for non-profit healthcare entities — it measures how effectively the entity deploys resources toward its healthcare mission versus administrative overhead. Regulators and funding bodies typically expect programme expense ratios exceeding 75%. For private healthcare, gross margin analysis reveals the balance between service revenue and clinical delivery costs, while DSO reflects the complexity of the reimbursement cycle (insurance claims, government payments, patient billing).
European healthcare benchmarks from BACH show higher DSO than most sectors (median 60 days) due to insurance and government reimbursement processing times. Working capital management is complicated by the need to maintain critical medical supply inventories while managing cash flow cycles that can extend 60–120 days for government-funded services. Research-active healthcare organisations face additional complexity from grant-funded activities with restricted fund accounting requirements.
Regulatory Context
CQC regulatory compliance. Medical malpractice provisions. Grant income conditions (IAS 20). Research grant restricted funds. CSRD sustainability reporting obligations for healthcare groups.
Industry-Specific Going Concern Indicators (ISA 570)
Government funding cuts or commissioning contract losses
Regulatory quality ratings downgrades
Medical malpractice claims exceeding insurance coverage
Staff vacancy rates affecting ability to deliver services
Operating deficits exceeding 3% of total expenditure
Loss of accreditation or regulatory enforcement action
Worked Example: European Private Healthcare Group
MedCenter Groep NV — private hospital group with €65M revenue
Key results: Current Ratio: 1.33, Quick Ratio: 1.10, Gross Margin: 40.0%, Net Margin: 5.0%, ROE: 14.1%, ROA: 6.8%, D/E: 1.09, Interest Coverage: 4.3x, DSO: 48 days, Altman Z'-Score: 3.15 (Safe Zone)