Enter 16 figures from your financial statements into this free Excel template and it calculates the current ratio, quick ratio, debt-equity, interest cover, DSCR, gross and net margin, ROA, ROE, inventory days, receivable days and payable days, comparing this year with last year. Useful before a bank loan application or a board meeting.
During an audit, auditors use ratio analysis to spot figures that moved unusually from last year. Banks do the same before lending. The template is a simplified version of that audit ratio analysis format.
What the ratios tell you
| Ratio | Formula | What it shows |
|---|---|---|
| Current ratio | Current assets ÷ current liabilities | Ability to pay liabilities due within a year |
| Quick ratio | (Current assets − inventory) ÷ current liabilities | Ability to pay without selling stock |
| Debt-equity | Total borrowings ÷ equity | Owner's money versus borrowed money |
| Interest cover | Operating profit ÷ interest expense | How many times profit covers interest |
| DSCR | (Net profit + depreciation + interest) ÷ (interest + principal repayments) | Whether cash covers instalments and interest |
| Gross margin | (Sales − COGS) ÷ sales | How much is left on each sale |
| Inventory days | Inventory ÷ COGS × 365 | How long goods sit in the warehouse |
| Receivable days | Receivables ÷ sales × 365 | How long money stays with customers |
If the ratios look bad
- First check the inputs: overstated stock or receivables, or short-term loans shown as long-term, change ratios a lot
- If a one-off explains it (buying stock for a big order, a new machine), explain it in the notes
- Prepare the explanation before talking to the bank; do not change figures to improve ratios, because the bank compares them with your bank statements and returns
Rules of thumb versus your industry
The comment column gives rules of thumb, such as a current ratio above 1 being healthy. But trading, manufacturing and service businesses have different normal ranges. Comparing with similar companies and with your own previous years is more meaningful. If you need the full loan file, see audited accounts with DVC.
Frequently asked questions
Where do I get the figures?
From audited or draft financial statements: the statement of financial position, income statement and notes. Annual principal repayments are in the loan sanction letter or repayment schedule.
I only have one year's figures.
Leave last year's column empty; this year's ratios still calculate.
Talk to us about your accounting work
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Written by the EOMS Hisab accounts team. Last reviewed: . Bangladesh rules change with each Finance Act, SRO and circular. Check rates and thresholds against the latest official source before relying on them.