Methodology

OPEN METHODOLOGY

How the Business Health Score is calculated.

The score is based on documented inputs, fixed weights and linear interpolation between published threshold points.

Input definitions

Metric	Definition
Cash on hand	Current freely available company cash.
Expected cash inflows in the next 30 days	Realistically expected incoming cash over the next 30 days.
Expected cash outflows in the next 30 days	Expected cash payments over the next 30 days, including payroll, tax, suppliers, debt service and operating payments.
Monthly fixed operating costs	Recurring monthly cash costs required to run the business.
Total receivables	All open customer receivables.
Receivables overdue by more than 30 days	Open receivables that are more than 30 days overdue.
Payables due in the next 30 days	Supplier and other payments that need to be settled within the next 30 days.
Revenue TTM	Revenue generated across the latest trailing 12 months.
Previous revenue TTM	Revenue generated across the comparable preceding 12-month period.
EBITDA TTM	EBITDA across the latest trailing 12 months.
Unbilled completed work	Completed work or services that can reasonably be invoiced but have not yet been billed.
Top-customer revenue share	The largest customer's share of trailing-12-month revenue.

Derived metrics

The starting model applies a 30% prudence discount to expected inflows to moderate optimistic cash assumptions.

Conservative inflows

expected_cash_inflows_30d x 0.70

Net liquid buffer

cash_on_hand + conservative_inflows - payables_due_30d

Runway

net_liquid_buffer / monthly_fixed_operating_costs

30-day cash coverage

(cash_on_hand + conservative_inflows) / expected_cash_outflows_30d

Overdue receivables ratio

receivables_overdue_30d / receivables_total

Unbilled work in months of revenue

unbilled_completed_work / max(monthly_revenue, 1)

Payables pressure

payables_due_30d / max(cash_on_hand + conservative_inflows, 1)

EBITDA margin

ebitda_ttm / max(revenue_ttm, 1)

Revenue growth

(revenue_ttm - revenue_previous_ttm) / revenue_previous_ttm

Dimension logic and threshold tables

Liquidity resilience

Runway in months

Value	Score
0	0
0.5	20
1	40
2	65
3	80
6	100

30-day cash coverage

Value	Score
0.5	0
0.8	35
1	60
1.2	80
1.5	100

Working capital

Overdue receivables

Value	Score
0	100
0.1	90
0.25	65
0.5	30
0.75	10
1	0

Unbilled work

Value	Score
0	100
0.25	90
0.5	75
1	50
2	20
3	0

Payables pressure

Value	Score
0	100
0.5	90
1	70
1.5	45
2	20
3	0

Profitability

EBITDA margin

Value	Score
-0.2	0
-0.1	15
0	40
0.05	60
0.1	80
0.2	100

Revenue momentum

Revenue growth

Value	Score
-0.3	0
-0.15	20
-0.05	40
0	60
0.1	80
0.25	100

Customer concentration

Largest customer share

Value	Score
0.1	100
0.2	90
0.3	75
0.4	60
0.5	45
0.7	20
1	0

Weights, bands and rules

Weights

Liquidity resilience: 30%
Working capital: 25%
Profitability: 20%
Revenue momentum: 15%
Customer concentration: 10%

Dimension scores and total score are stored to two decimal places. The interface displays the total score rounded to the nearest whole number.

Score bands

Healthy: 80.00 - 100.00
Watch: 60.00 - 79.99
Critical: 0.00 - 59.99

Recommendations are sorted by lowest dimension, highest severity and a fixed tie-breaker. Free sees rank 1, Pro up to 3 and Business up to 5.

A change to the formula creates a new formula version. Historical assessments keep their original formula version and are not silently rewritten in hindsight.

Limitations

The score is a management indicator, not a credit rating, audit, formal going-concern opinion or company valuation.

The model does not replace legal, tax or insolvency advice.

The model does not estimate missing financial values and does not use generative AI to correct submissions.

When previous-period revenue is zero, the growth dimension is set to a neutral score of 50 and flagged as a data-quality warning.

Start on Free

Start with a defensible baseline.

Create your first company, enter the key financial values and receive a reproducible assessment.

Create a free account