Your business health report

What does the report measure?

You upload your trial balance (Excel, CSV or PDF), and the report answers three questions in non-accounting language:

• Profitability: Is your business making a profit, and how much from each riyal of sales?
• Liquidity: Are your short-term assets enough to pay your short-term obligations?
• Debt: Are the business's debts within safe limits compared with equity?

Then come days sales outstanding, inventory days and days payable to suppliers, with one sentence summarizing each area.

How is the trial balance read?

The report reads the trial balance with the same logic as the financial statements tool: it recognizes the account number, account name and balance columns, classifies each account (cash, customers, inventory, suppliers, sales, expenses…), builds the income statement and the statement of financial position from them, and then calculates the indicators. The file is read inside your browser and is not uploaded to any server.

The result is only as accurate as the classification, so the report shows the account classification table for you to check, and shows a warning if the trial balance is not balanced.

Profitability

• Gross profit margin = gross profit ÷ net sales: what is left after the cost of goods or services.
• Net profit margin = net profit ÷ net sales: what is left after all expenses and Zakat.
• Return on equity = net profit ÷ equity: what your capital and retained earnings earned during the period.

These indicators have no color in the report, because the right margin varies a lot from one business activity to another: a gold shop's margin is not a restaurant's or a service company's. The only case where the report writes “risk” is a loss.

Liquidity

• Current ratio = current assets ÷ current liabilities. The well-known rule of thumb in financial analysis: 1.5 or more is good, from 1 to less than 1.5 is caution, and less than 1 is risk (your short-term assets do not cover your short-term obligations).
• Quick ratio = (current assets − inventory − prepaid expenses) ÷ current liabilities: what can be turned into cash quickly. The rule of thumb: 1 or more is good, from 0.5 to less than 1 is caution, and less than 0.5 is risk.

These are rules of thumb, not regulatory standards: a business that sells for cash and turns its inventory over quickly can operate safely with lower ratios.

Debt and turnover

• Liabilities to equity = total liabilities ÷ equity. The rule of thumb: 1 or less is good, more than 1 up to 2 is caution, and more than 2 is risk. If equity is negative or zero, the status is risk, because the business's liabilities are greater than or equal to its assets.
• Days sales outstanding = accounts receivable ÷ net sales × 365, inventory days = inventory ÷ cost of sales × 365, and days payable to suppliers = accounts payable ÷ cost of sales × 365. They are calculated on 365 days using the period's figures, so if the trial balance covers less than a year, the days appear larger than they really are.

Example from the sample trial balance

The “Try an example” button loads an illustrative trial balance for a hypothetical trading business, and its result is:

• Net sales of 3,340,000 SAR and net profit of 170,000 SAR, so the net profit margin is 5.09%.
• Current ratio = 1,184,000 ÷ 740,000 = 1.60: good.
• Quick ratio = 609,000 ÷ 740,000 = 0.82: caution, because a large part of the current assets is inventory.
• Liabilities to equity = 837,000 ÷ 860,000 = 0.97: good.
• Days sales outstanding 45.0 days, inventory days 79.7 days, and days payable to suppliers 70.4 days.

Limits of the report

The report is a snapshot from a single trial balance, and it does not compare with previous periods or with similar businesses. Account classification is automatic, based on account names and numbers, so review it in the table. This is an estimate based on the numbers you entered, not financial or investment advice.

Frequently asked questions

Content last reviewed: 2026-10-27