Business Health Score Explained

What is the health score?

The business health score is a simplified summary of six key indicators: gross margin, net margin, monthly cash flow, ROI, payback period, and how actual sales compare to break-even sales. Each indicator gets 0, 1, or 2 points based on simple thresholds.

What the score tells you

• A higher total points to stronger overall financial health.
• A low score in one area shows where to focus first.
• The strongest and weakest areas help prioritise decisions.

How to use it

• Update inputs whenever your numbers change meaningfully.
• Use the weakest area as your next improvement target.
• Track the score over time to see if changes actually help.

Practical example

A small online shop has a strong gross margin (2 pts) and decent ROI (1 pt), but negative cash flow (0 pts) and sales well below break-even (0 pts). Total = 5 / 12. The score points clearly to cash flow and sales volume as the first areas to fix — not pricing or product mix.

Important limits

This is a simplified educational tool, not a full financial audit. It does not consider industry specifics, debt structure, taxes, seasonality, or risk in detail. Use it as a starting point for thinking, not as a final answer.