A financial health check is an essential tool for any business seeking a clear understanding of its performance and a solid foundation for growth. It brings together financial and non-financial data to give a comprehensive view of three critical areas: profit, cash, and enterprise value. By analysing these elements together, businesses can better understand operational efficiency, financial strength, and the drivers of long-term value.

Creating an effective health check requires accurate, up-to-date financial statements, detailed monthly accounts, and carefully chosen non-financial metrics. Non-financial data might include operational efficiency, customer satisfaction, or employee engagement — metrics that reveal the underlying drivers of profit, cash flow, and value creation.

Key principles of a robust financial health check include connecting operational drivers to outcomes, combining financial and non-financial measures, analysing how profit, cash flow, and value creation interact, and generating insights that support sustainable decision-making.

Common financial metrics include profitability measures such as gross profit margin, EBITDA, and NPAT; cash flow metrics like operating cash flow, free cash flow, and debt ratios; liquidity measures including current ratio and accounts receivable days; and return on investment metrics like return on equity and economic value added (EVA). These provide a clear picture of how efficiently the business generates returns from its capital.

Ensuring data quality is crucial. Accounting records should be accurate and up to date, and data should be normalised to account for anomalies or non-recurring items. This ensures that trends, ratios, and insights are reliable and meaningful.

A financial health check offers more than just numbers. It allows businesses to monitor performance against strategic goals, prepare for investors or lenders, manage covenants, and identify opportunities for improvement. For businesses aiming to grow beyond the survival stage, it provides the clarity and confidence needed to make informed, strategic decisions.

Gallagher Keane recommends using tools to simplify the process, integrate financial and non-financial data, and generate actionable insights that strengthen business performance and long-term planning.

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