How Financial Health Analysis ratios and values are calculated
This page documents the formulas used in the Financial Health Analysis (FHA) report. Values are derived from the balance sheet and profit & loss inputs you submit on the FHA form. Ratios are rounded to two decimal places unless noted as a percentage.
For the full formula list by business type, open:
| Component | Formula |
|---|---|
| Current Liabilities | Account Payable + Short Term Loan + Other Current Liabilities |
| Non-Current Liabilities | Long Term Liability |
| Total Liabilities | Current Liabilities + Non-Current Liabilities |
| Total Non-Current Assets | Fixed Asset / PPE + Other Non Current Assets |
| Total Current Assets | Inventory / Stock + Debtors / Trade Receivable + Cash and Bank Balance + Other Current Assets |
| Total Assets | Total Non-Current Assets + Total Current Assets |
| Working Capital | Current Assets − Current Liabilities |
| Capital Employed | Total Assets − Current Liabilities |
Manufacturing / Trading
Service
EBIT (Earnings Before Interest & Tax) = Net Profit + Interest Expense + Tax Expense
| Ratio | Formula | Unit |
|---|---|---|
| Current Ratio | Current Assets ÷ Current Liabilities | Times |
| Quick Ratio | (Current Assets − Inventory) ÷ Current Liabilities | Times |
| Cash Ratio | Cash & Bank Balance ÷ Current Liabilities | Times |
| Working Capital | Current Assets − Current Liabilities | ₹ |
| Ratio | Formula | Unit |
|---|---|---|
| Debt to Equity | Total Liabilities ÷ Capital Account / Shareholders Fund | Times |
| Debt Ratio | Total Liabilities ÷ Total Assets | Times |
| Financial Leverage | Total Assets ÷ Capital Account / Shareholders Fund | Times |
| Interest Coverage | EBIT ÷ Interest Expense (Net Profit + Interest Expense + Tax Expense) ÷ Interest Expense | Times |
Turnover ratios for inventory, receivables, and payables are expressed in days.
| Ratio | Formula | Unit |
|---|---|---|
| Inventory Turnover | (Inventory ÷ COGS) × 365 | Days |
| Receivable Turnover | (Debtors ÷ Revenue) × 365 | Days |
| Payable Turnover | (Account Payable ÷ Purchases or COGS) × 365 | Days |
| Assets Turnover | Revenue ÷ Total Assets | Times |
| Ratio | Formula | Unit |
|---|---|---|
| Gross Profit Ratio | Manufacturing / Trading: ((Revenue − COGS) ÷ Revenue) × 100 Service: ((Revenue − Direct Cost) ÷ Revenue) × 100 | % |
| Net Profit Ratio | (Net Profit ÷ Revenue) × 100 | % |
| ROCE | (EBIT ÷ Capital Employed) × 100 EBIT = Net Profit + Interest Expense + Tax Expense | % |
| ROE | (EBIT ÷ Capital Account / Shareholders Fund) × 100 EBIT = Net Profit + Interest Expense + Tax Expense | % |
Each ratio is compared against category-specific benchmarks for Manufacturing, Trading, and Service businesses. Benchmark bands are shown in the report as Ideal, Acceptable, and Risky based on your selected business category.
Where applicable, the Industry Leader / Benchmark Company you provide is used in the AI analysis for contextual comparison alongside these standard ratio bands.