How RunSmart Calculates Health Scorecard Metrics

RunSmart’s Health Scorecard evaluates your business across five core areas: Capitalization, Efficiency, Profitability, Liquidity, and Solvency.

Each metric is automatically calculated using your financial statements to help you understand how your business is performing today—and where it may be heading.

Total Debt to Capitalization Ratio
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This measures how much of your business is funded by debt versus owner investment.

A higher ratio means greater reliance on borrowed money, which can increase financial risk. A lower ratio indicates a stronger equity position.

Formula:
Total Debt ÷ (Total Debt + Total Equity)

Days Sales of Inventory (DSI)
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Estimates how many days it takes, on average, to sell your inventory.

Higher values may indicate slow-moving inventory or overstocking. Lower values suggest inventory is turning over more quickly.

Formula:
Inventory ÷ Cost of Goods Sold × 30

Days Sales Outstanding (DSO)
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Measures how long it takes to collect payment after a sale.

A higher DSO means cash is tied up in receivables longer, which can impact cash flow. Lower values indicate faster collections.

Formula:
Accounts Receivable ÷ Total Income × 30

Days Payable Outstanding (DPO)
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Shows how long it takes to pay your suppliers.

A higher DPO can improve short-term cash flow, but consistently delaying payments may strain vendor relationships.

Formula:
Accounts Payable × 30 ÷ Cost of Goods Sold

Annualized Return on Assets (ROA)
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Measures how efficiently your business uses its assets to generate profit.

Higher values indicate stronger asset efficiency.

Formula:
(Net Income × 12) ÷ Total Assets

Annualized Return on Equity (ROE)
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Measures the return generated on the capital invested by owners.

Higher values indicate stronger returns for shareholders.

Formula:
(Net Income × 12) ÷ Total Equity

Net Operating Margin
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Shows how much profit your business generates from its core operations relative to revenue.

A higher margin indicates better cost control and operational efficiency.

Formula:
Operating Income ÷ Total Income

Annualized Asset Turnover Ratio
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Measures how effectively your assets are being used to generate profit.

Higher values indicate more efficient use of assets.

Formula:
(Total Income × 12) ÷ Total Assets

Working Capital Ratio (Current Ratio)
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Measures your ability to cover short-term obligations using short-term assets.

A ratio above 1 generally indicates you can meet upcoming financial obligations.

Formula:
Current Assets ÷ Current Liabilities

Quick Ratio (Acid-Test Ratio)
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A stricter version of the current ratio that excludes inventory, focusing only on your most liquid assets.

This shows how well you can meet obligations without relying on inventory sales.

Formula:
(Current Assets – Inventory) ÷ Current Liabilities

Interest Coverage Ratio
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Measures how easily your business can cover interest payments on outstanding debt.

A higher ratio indicates stronger financial stability. A ratio below 1 may signal potential risk.

Formula:
EBIT ÷ Interest Expense

Debt to Assets Ratio
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Shows what portion of your assets is financed through debt.

Higher values indicate greater reliance on borrowed funds.

Formula:
Total Debt ÷ Total Assets

Fixed Charge Coverage Ratio (FCCR)
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Measures your ability to cover fixed financial obligations such as loan payments, rent, and lease commitments.

This provides a broader view of financial stability than interest coverage alone.

Formula:
(EBITDA + Fixed Charges) ÷ (Interest Expense + Fixed Charges)

How we calculate Fixed Charges:
Fixed Charges represent recurring, contract-based financial obligations.

RunSmart identifies these by scanning your financial statements for line items containing keywords such as:

These items are grouped together to estimate your total fixed financial commitments.

Each category highlights a different aspect of your business:

Together, these metrics provide a clear, data-driven view of your business health.