The Ratios
That Tell
the Real
Story.
Financial accounts report what happened. Ratios and statistics analysis tells you why it happened, whether it's sustainable, and what a buyer, lender, or investor will conclude when they run the same numbers on your business. These are the calculations that underpin every serious valuation engagement at Achieve Corporation.
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What Happened. Ratios Explain Why.
A set of accounts tells you revenue, profit, and assets. A ratio analysis tells you whether those numbers represent a healthy, efficiently run business — or a business that looks profitable until a buyer's due diligence team runs the same calculations and finds problems the headline figures conceal.
Ratios translate raw financial data into comparable, interpretable metrics. Gross margin tells you pricing power. DSCR tells a lender whether you can service debt. Debtor days tells a buyer how much working capital the business really needs. Each metric is one your acquirer, lender, or investor will calculate independently. Knowing where you stand — and where your numbers compare unfavourably to sector benchmarks — before entering a transaction is the work that protects the valuation.
At Achieve Corporation, ratio analysis is embedded in every valuation engagement. It identifies the operational and financial characteristics that support the multiple being sought — and surfaces the areas that will attract challenge or adjustment during due diligence. That is the difference between a valuation that holds and one that erodes through the negotiation process.
Four Categories. Every Metric That Matters.
Measures of what the business generates relative to revenue and capital deployed — the ratios that determine margin quality and earnings sustainability under buyer scrutiny.
Measures of the business's ability to meet short-term obligations — the ratios that determine working capital requirements and cash position in a transaction.
Measures of financial structure and debt capacity — the ratios banks use in credit assessment and acquirers use to determine how much leverage a business can carry.
Measures of how effectively the business converts assets and capital into revenue — the ratios that reveal operational quality and flag working capital risks in a transaction.
Ratios Are the
Due Diligence a Buyer Runs First.
Every acquirer, lender, and institutional investor runs ratio analysis before they table a number. If they find something you haven't already addressed, the adjustment comes off the price — not off the table. The ratios in our model are the same calculations a buyer's financial adviser will produce. The difference is that we produce them first, with the context to explain what they show and what, if anything, to do about it before entering a process.
Ratio analysis within a valuation engagement has two functions. The first is diagnostic: confirming that the earnings quality, liquidity, leverage, and efficiency of the business support the valuation being sought. The second is strategic: identifying where ratios compare unfavourably to sector benchmarks, so those weaknesses can be addressed — or at minimum, explained — before they surface as price adjustments in negotiation.
Three-year trend data is used wherever available. A single year's ratios tell you where the business is. Three years tells you the direction — and whether the direction is one a buyer will pay a premium for or discount against.
All 25+ ratios calculated from the last three years of accounts where available — producing trend data that shows trajectory, not just current position.
Ratios compared against current sector benchmarks — identifying where the business outperforms, where it is in line, and where it presents a due diligence risk.
Disparity between current ratios and sector benchmarks documented explicitly — showing what would need to change to close the gap and what impact closing it would have on valuation.
Ratios used to support or challenge the earnings multiple and DCF results — confirming that the valuation range is consistent with the operational and financial characteristics the ratios reveal.
Ratios that a buyer's team is likely to focus on — DSCR, debtor days, working capital ratio — flagged with context, so the seller enters the process aware of where the scrutiny will land.
What the Numbers Say Before You Do.
A reported 18% EBITDA margin looks strong. ROA of 4% against an asset-heavy balance sheet raises questions about whether the business is generating adequate returns on capital deployed. Adjusted EBITDA versus reported EBITDA shows the gap between what the accounts show and what the business actually earns. These three numbers together determine whether the multiple is justified or vulnerable.
A business with 75 debtor days and a current ratio of 0.9 requires significantly more working capital to operate than one with 35 debtor days and a current ratio of 1.8. The difference affects both the equity cheque in an acquisition and the amount of acquisition debt a bank will advance. Working capital adjustments in M&A are a common source of post-completion disputes — one that ratio analysis identifies before it becomes a problem.
DSCR below 1.25× means the business cannot comfortably service the debt a typical leveraged acquisition would place on it. That limits the buyer pool to cash buyers or reduces the leverage available — which compresses what a financial buyer can pay. A seller who understands their own DSCR before going to market understands exactly which buyers can pay full price and which cannot.
Know What
the Ratios
Say Before
a Buyer Does.
All valuations are conducted personally by Mark Ross Roberts — Senior Partner, Financial Modelling and Valuations Analyst (FMVA) and Commercial Banking and Credit Analyst (CBCA). 30 years of UK mid-market deal experience. Every engagement includes the full ratio set across profitability, liquidity, solvency, and efficiency — with three-year trend analysis and sector benchmark comparison.
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