Solution Properties
Solution ID:
250428133500583
Last Modified Date:
Thu May 01 08:13:33 UTC 2025
Taxonomy Path:
Case category//How do I...//an integration
Author:
[email protected]
Copilot - Instant report analysis terminology and calculation methods
Description

When you use Copilot insights for instant report analysis, it displays results from the Balance sheet and Profit & loss (P&L) reports. Find out what these results mean and how the figures calculate.  

Balance sheet analysis

A Balance sheet provides an overview of a company's financial position at a specific time, highlighting its assets, liabilities, and owner’s equity.

It reveals key insights into the company’s financial stability, liquidity, and solvency.

 ▼Descriptions and calculations

 

Term Description How it's calculated Strength or weakness
Solvency Ratio Measures a company’s ability to meet its long-term obligations. Total Assets / Total Liabilities (from the Balance Sheet report).
  • Strength - if the ratio is high, showing strong financial security. For example, greater than 2
  • Weakness - if the ratio is low, indicating higher financial risk. For example, lower than 1.5
Debt Ratio Measures the amount of assets financed by debt. Total Liabilities / Equity.
  • Strength - if the debt ratio is low, for example, below 1
  • Weakness - if the debt ratio is high, suggesting dependency on external financing. For example, higher than 2
Liquidity Ratio Assesses the ability to cover short-term liabilities with current assets. Current Assets / Current Liabilities (from the Balance Sheet report).
  • Strength - if its high, showing good short-term financial health. For example, above 1.5
  • Weakness - if it's low, indicating potential liquidity problems. For example, lower than 1.5)
Net Assets Position Represents the value remaining after subtracting liabilities from assets. Total Assets – Total Liabilities (from the Balance Sheet report).
  • Strength - if the value is positive and strong
  • Weakness - if the value is weak or negative
Shareholder Equity

Reflects shareholders' residual interest in the company's assets after deducting liabilities.

 Total Assets - Total Liabilities (from the Balance Sheet report)
  • Strength - if shareholder equity is positive and stable
  • Weakness - if shareholder equity is low or negative
Non-Current Assets Assets not expected to convert into cash within a year. Total Assets – Current Assets (from the Balance Sheet report).
  • Strength - if non-current assets provide long-term value and stability. For example, greater than 50% of total assets)
  • Weakness - if the amount is insufficient for operational needs
Non-Current Liabilities Long-term financial obligations which not due within one year. Total Liabilities – Current Liabilities.
  • Strength - if manageable in relation to the company's size and revenues
  • Weakness - if excessive, posing long-term financial risks
Quick Ratio Measures the ability to meet short-term liabilities without relying on inventory.

Quick Assets ÷ Current Liabilities, where:

  • Quick Assets = Current Assets - Inventory - Prepaid Expenses
  • Current Assets = Current Assets total on Balance Sheet
  • Inventory = Stock Nominal Code used for Opening and closing stock
  • Prepaid Expenses = Prepayments (control account for prepayments)
  • Strength - if the ratio is high, for example, greater than 1
  • Weakness - if the ratio is low, for example, below 0.8
Assets Total value of all resources owned by the company, both fixed and current. Total of fixed and current assets from the Balance Sheet.
  • Strength - if the asset base is growing and well utilised
  • Weakness - if assets are declining or underperforming
Liabilities Total financial obligations the company must pay to third-parties. Total of current and long-term liabilities from the Balance Sheet.
  • Strength - if liabilities are under control relative to assets
  • Weakness - if liabilities are growing faster than assets
Equity Represents what remains for the owners after all debts are paid. Total Assets - Total Liabilities (from the Balance Sheet report).
  • Strength - if equity is positive and increasing
  • Weakness - if equity is shrinking or negative
Current Assets Assets that are expected to be converted into cash within one year. Value of current assets reported on the Balance Sheet.
  • Strength - if current assets cover current liabilities adequately, for example, at least 20%
  • Weakness - if current assets are insufficient
Current Liabilities Short-term obligations that are due within one year. Value of current liabilities reported on the Balance Sheet.
  • Strength - if current liabilities are manageable compared to current assets
  • Weakness - if they exceed current assets
Cash Reserves Funds that are available to cover unexpected expenses or opportunities. Capital and reserves amount reported on the Balance Sheet.
  • Strength - if cash reserves are strong relative to the business needs. For example, it covers at least 3 to 6 months of operating expenses
  • Weakness - if reserves are critically low
Debt Amount Total value of current and long-term debts owed by the company. Total of current and long-term liabilities from the Balance Sheet.
  • Strength - if debt is kept under control, for example, below 1
  • Weakness - if debt levels are excessive compared to equity, for example, above 2
Inventory Value of goods available for sale, measured using stock codes from system setup. Value for the Stock Nominal Code for Opening and closing stock.
  • Strength - if inventory turnover is fast
  • Weakness - if inventory levels are too high or obsolete or inventory turnover is slow
Accounts Receivable Money owed to the company by customers for goods or services delivered. Debtors value from the Balance Sheet.
  • Strength - if accounts receivable is collected promptly
  • Weakness - if receivables are ageing, and collection is delayed

Profit and Loss analysis

This report details the company's revenues, expenses, and profit or loss for a specific period. it shows its ability to generate income and manage costs.

Stakeholders use it to assess business profitability and evaluate the sustainability and efficiency of operations.

▼ Descriptions and calculations  

 

Term Description  How it's calculated Strength or weakness
Return on Sales Indicates the percentage of revenue converted into net profit, measuring sales profitability. Net Profit or Loss / Total Sales (from P&L report) x 100
  • Strength - when the ratio is high and shows a healthy level of profitability
  • Weakness - when the value is low or negative, indicating that sales aren't converting into profit effectively
Gross Margin on Sales Shows the gross margin on sales, highlighting what remains after deducting the cost of purchases. (Sum of Sales - Purchases) / Sum of Sales × 100 (from the P&L report)
  • Strength - when the margin is high, meaning sales far exceed purchases
  • Weakness - when the margin is low or negative, indicating poor cost control or low pricing
Net Income Reflects the company's final net income after taxes. Net Profit/(Loss) After Taxation (from the P&L report)
  • Strength - if the company reports a solid net profit
  • Weakness - if the company reports a net loss
Gross Profit  Represents the company’s gross earnings before operating, financial, and tax expenses. Taken directly from the P&L report.
  • Strength - if gross profit is positive
  • Weakness - if the gross profit is low or negative, which can indicate high direct costs
Net Profit Represents the company’s total profit after all expenses deduct. Taken directly from the P&L report.
  • Strength - if there's a healthy net profit
  • Weakness - if the company reports a net loss