Calculate your ESFA financial health grade using official methodology
The Financial Health Assessment is the ESFA's methodology for evaluating an organisation's financial strength. It uses three key financial indicators—Profitability, Solvency, and Gearing—to calculate a total score (0-300) that determines your financial health grade.
Used For:
Definition: An organisation that appears to have robust finances to fulfil its contractual obligations and to respond successfully to opportunities or adverse circumstances.
Indicators: Normally an organisation with outstanding or good indicators for profitability, solvency and gearing.
Definition: An organisation that appears to have sufficiently robust finances to fulfil its contractual obligations, and to respond successfully to most opportunities or adverse circumstances.
Indicators: Normally an organisation with at least 2 good indicators for profitability, solvency and gearing.
Definition: An organisation that appears to have sufficient resources to fulfil its contractual obligations, but also appears likely to have limited capacity to respond successfully to opportunities or adverse circumstances.
Indicators: Normally an organisation with at least 2 satisfactory indicators for profitability, solvency and gearing.
Definition: An organisation that is in financial difficulty and very likely to be dependent on the goodwill or financial support of others. There is a significant risk of organisations in this group not being able to fulfil contractual obligations because of weak financial health.
Indicators: Normally an organisation with at least 2 inadequate indicators for profitability, solvency and gearing.
Profit after tax as a percentage of turnover:
Profitability (%) = (Profit after tax ÷ Turnover) × 100Important adjustments:
Current ratio:
Solvency = Current assets ÷ Current liabilitiesMeasures ability to meet short-term obligations with short-term assets.
Total debt as a percentage of reserves and debt:
Gearing (%) = (Total debt ÷ (Reserves + Total debt)) × 100Reserves definition:
Shareholders' funds less intangible assets
⚠️ If reserves are negative, automatic score of 0 is given
Debt includes all long-term and short-term borrowings:
"Other Creditors" Treatment:
Group Undertakings:
Amounts owed to group undertakings (shown in creditors note) will be included as debt unless stated as trading activity or other non-debt related activity.
| Score | Profitability (%) | Solvency | Gearing (%) |
|---|---|---|---|
| 100 | ≥ 9 | ≥ 2.0 | = 0 |
| 90 | ≥ 8 | ≥ 1.8 | < 10 |
| 80 | ≥ 7 | ≥ 1.6 | < 20 |
| 70 | ≥ 6 | ≥ 1.4 | < 30 |
| 60 | ≥ 5 | ≥ 1.2 | < 40 |
| 50 | ≥ 4 | ≥ 1.0 | < 50 |
| 40 | ≥ 3 | ≥ 0.8 | < 60 |
| 30 | ≥ 2 | ≥ 0.7 | < 70 |
| 20 | ≥ 1 | ≥ 0.6 | < 80 |
| 10 | ≥ 0 | ≥ 0.5 | < 90 |
| 0 | < 0 | < 0.5 | ≥ 90 or negative reserves |
Total Score: Add the three individual scores (max 100 each) to get total score out of 300.
You'll need figures from your most recent financial statements:
Input all financial figures into the calculator. The tool will automatically calculate the three indicators and apply the scoring methodology.
See your financial health grade (Outstanding, Good, Satisfactory, or Inadequate) with detailed breakdown of each indicator score.
Use the results for contract applications, financial planning, or to identify areas for improvement.
Use the Financial Health Assessment tool to calculate your ESFA grade.
Open Assessment Tool