What does a full health check look like?

Individual ratios are like single medical readings — a pulse, a temperature, a blood-pressure number. Any one can mislead. A full health check reads them together, letting each ratio cover another's blind spot. This lesson walks the whole examination in order.

The four questions, in sequence

A structured read moves through the same four questions this course was built around:

1. Is it profitable? Gross, operating and net margins; ROA and ROE. Does the business earn well, and has it done so consistently — or is a good year masking a shaky trend?
2. Can it pay its short-term bills? Current and quick ratios. Enough short-term resources to cover short-term obligations, without hoarding idle cash?
3. Can it survive its long-term debt? Debt-to-equity and interest coverage. Is the borrowing carriable if a bad year arrives?
4. Does it use its resources efficiently? Asset, inventory and receivables turnover; the cash conversion cycle. Is the company working its assets, or letting them idle?

Then DuPont ties it off: where does the ROE actually come from — quality, efficiency, or leverage?

A worked mini-example

An illustrative company, read across the four:

• Net margin 15%, ROE 18%, both steady for three years — solid, consistent profitability.
• Current ratio 1.6, quick ratio 1.1 — comfortable short-term footing.
• Debt-to-equity 0.6, interest coverage 9 — modest, well-covered borrowing.
• Asset turnover 0.75, stable — an asset-heavier business, working its base at a steady rate.
• DuPont ties it out: net margin 15% × asset turnover 0.75 × equity multiplier 1.6 (= 1 + the D/E of 0.6) = 18%, the ROE above. Margin and turnover alone earn 11.25% on the assets; the moderate borrowing lifts that to 18%. None of the three factors has moved much in three years, so this is not a rising-leverage story.

No single number is spectacular, but nothing contradicts anything else, and the trends point the same way. That coherence — the readings agreeing with each other — is itself a sign of health. The alarms tend to ring where ratios disagree: fat profits but sinking cash flow, rising ROE but ballooning debt.

The point of reading together

A high margin means less if leverage is extreme. Strong ROE means less if it's pure borrowing. Good liquidity means less if profit is quietly evaporating. Health is a pattern, not a score — and you now know all the pieces that make the pattern. The remaining lessons sharpen the reflexes for when that pattern looks too clean.

Run this check on a bank or an insurer and every reading is wrong. A bank's balance sheet has no current and non-current split, so any "current assets" figure a data service shows for a bank is its own mapping rather than a line the bank reports, and the current ratio built on it means nothing. Deposits are liabilities, so total liabilities over equity lands near 11 for JPMorgan (fiscal 2025, read 29 September 2026) and says nothing about distress. Operating cash flow swings with loan and deposit flows and carries no signal about profit quality. For these businesses the questions change: net interest margin and loan losses for a bank, the combined ratio for an insurer, and capital measured against regulatory minimums rather than against debt. Those figures live in the filing, and only some of them in a standard financial-data table.

Try it now

Everything the four questions need, in three tables from one filing.

1. Is it profitable? Net income ÷ total revenue. Can it pay short-term bills? Current assets ÷ current liabilities. Can it survive its debt? Total liabilities ÷ total shareholder equity. Does it use its resources well? Total revenue ÷ total assets. Four ratios, four rows each.
2. Add the cross-check the third table exists for: operating activities ÷ net income. Profit that is not arriving as cash is the first place the readings disagree.
3. Note whether the four tell a consistent story or point in different directions. Coherence is itself a finding; so is contradiction.
4. Write one honest sentence describing the company's health as a pattern — an observation, not a call. Then run the same four ratios, and the cash cross-check, on a peer whose fiscal year ends in June rather than September:

That sentence, twice, is the whole course working at once.