There are several rules of thumb for recognizing a healthy business. Current ratio , which is the ratio of your current assets to current liabilities. Generally, a ratio of current assets to liabilities that is at least 2 to 1 is good. This ratio is a measure of liquidity, particularly where your business will be if there is a crisis. A quick ratio of 2.0 or better is considered acceptable.
Total debt is divided by net worth.
Although debt adds risk, a debt-free business may not be able to grow fast enough. The whole reason for using debt is to help grow the business and increase the owners' return on capital. A debt-to equity relationship that is lower than 1 is considered good for a business. There are other financial ratio analyses that will be of great help to you in managing your financial situation. Your ability to get business and move your inventory are your best assurance that you have a future in your business.