Relationship Ratios
Test financial relationships that should move together and flag when they decouple.
- General ledger alone
- Compares with last year
- Key analysis in Planning & analytics
How the result is read
Some figures move together for a reason — interest with borrowings, payroll tax with wages, commission with sales — and the finding is the year they stop. Both sides are defined from the same mapped ledger the statements are built from, so a breach can be opened. Where a balance is averaged, the basis is stated: opening-plus-closing over two and the mean of twelve month-ends differ materially on a balance that moved in one step. A breach is a question, not a conclusion.
The worksheet, on the demo engagement
Relationship Ratios, as the application draws it for Harrow Precision Engineering Ltd, the fictional demo engagement — one row per relationship tested.
- Band breaches
- 2
- Decoupled pairs
- 1
Every ratio is recomputed from the same ledger the statements are built from, so a breach can be opened to the accounts behind it. Interest expense of 650 on average debt of 15,000 is 4.3%, against 3.2% last year, while borrowings were repaid — a decoupling that does not articulate (ISA 520). Average debt is opening plus closing over two; on a balance that moved in one step a monthly mean would give a different answer, so the basis is stated.
Result grid5 rows
| Relationship | CY ratio | PY ratio | Expected band | Flag |
|---|---|---|---|---|
| Interest / Avg Debt | 4.3% | 3.2% | 3.0-3.6% | breach — 650 on avg debt 15,000; debt fell, interest rose |
| Depn / Avg gross PP&E | 4.1% | 4.0% | 3.8-4.4% | 1,072 on avg gross 26,250 |
| Payroll tax / Wages | 7.6% | 7.5% | 7.2-7.9% | |
| Commission / Revenue | 2.1% | 3.4% | 3.0-3.8% | below band |
| COGS / Revenue | 61.8% | 57.3% | 56-59% | margin compression |
In the application
Relationship Ratios is filed under Planning & analytics, index letter A. "Run all analyses" runs it with every other analysis the ledger can answer. The worksheet states the population it tested on its face — or "Not applicable" with the reason when a column it depends on is empty — and the Excel workbook the engagement exports files it under A, beside an index of the source files with their SHA-256 fingerprints.
Read it with
Run your next audit file test without the Excel crash.
One free engagement to evaluate, valid 60 days. The ledger never leaves the machine.
- 20 minutes
- Runs on a fictional engagement
- No client data required