Financial ratios: check a customer, supplier or partner
Financial ratios turn a company's annual accounts into a few readable indicators: liquidity, solvency and profitability. For a Belgian SME, they help you vet a customer before granting payment terms, choose a strategic supplier or prepare a credit application. This page explains how to read them and when to ask for help.
What financial ratios actually measure
These indicators usually fall into three families. First, liquidity: working capital, net cash and the current ratio show whether the business can pay its short-term debts. Second, solvency: the share of equity in total assets and the level of debt reveal how solid it is. Third, profitability: net margin, ROA and ROE indicate whether the activity creates value. Taken together, these financial ratios give a far more reliable picture than turnover alone.
Trends matter as much as levels. For instance, a margin that has shrunk three years in a row sends a clear signal. The same goes for equity that keeps falling, even if the latest year looks acceptable. A sound review therefore always compares several years: turnover, profit, headcount and equity. One good year is not enough to reassure a bank or a buyer, so look at the direction of each indicator as well.
Calculating financial ratios from NBB annual accounts
In Belgium, the National Bank publishes the annual accounts that companies file every year. This public source is valuable, yet it comes as XBRL filings or scanned balance sheets that remain hard to read as they are. Before you calculate financial ratios, ask yourself three questions. Which decision do you need to make? How many years do you want to compare? What size is the company? Indeed, Article 1:24 of the Belgian Companies and Associations Code distinguishes micro, small, medium and large companies, which determines the format of the accounts they file.
Keep one important limit in mind as well: filed accounts reflect the situation on the closing date, not in real time. In a volatile sector such as retail or construction, you should therefore add other signals, for example a payment risk score or alerts about changes published in the Crossroads Bank for Enterprises. Also check that you use the latest accounts on file, since older figures can hide recent difficulties.
What our article offers and when to call on us
Our article on automated company analysis shows how an engine collects NBB accounts, normalises them and computes the key financial ratios. It also explains size classification, trend charts and the PDF report of about ten pages, ready for a credit committee or an audit file. Accountants, fiduciaries, banks and B2B buyers will therefore save real time on data collection. In addition, the article lists the main use cases: onboarding a new client file, pre-scoring a credit application and checking a strategic supplier before signing.
Call in a professional if you want to integrate this kind of analysis into your own software, CRM or client portal. The Espero-Soft team builds web platforms and custom tools that turn public data on Belgian companies into clear financial ratios, with an interface designed for your users.
