Appendix A – Supplier Financial Health Assessment

A D&B score below any of the relevant thresholds set out in the Selection Questionnaire / Invitation to Tender will mean
provide rationale as to why they have fallen below the pre-determined D&B thresholds. It will be at the sole discretion of
teams as to whether they accept the rationale.

If the rationale is not accepted a formal financial health assessment as set out in this Appendix A will need to be underta

Supplier Financial Health Assessment

Company Entity Name
Registered Number
Impact of Supplier Failure

Period End Date Period End Date

Values stated in £'s % change
Income Statement Profitability Ratios
Turnover ROCE (Operating Profit)
Cost of Sales Gross Profit Margin
Gross Profit / (Loss) - - Operating Profit Margin
Admin Expenses Net Profit Margin
Operating Profit / (Loss) Solvency Ratios
Interest Payable Gearing (external)
Net Profit / (Loss) Gearing (internal)
Statement of Financial Position Interest Cover (Op Profit)
Non-Current Assets Liquidity Ratios
Current Assets Current Ratio
Trade Debtors Quick Ratio
Net Cash & Equivalents Efficiency Ratios
Stock Debtor Days
Current Liabilities Creditor Days
Trade Creditors
External Borrowings Risk Interpretation
Group Borrowings Profitability
Net Assets Solvency
Working Capital - - Liquidity
Capital Employed - - Efficiency

D-U-N-S:
Overall Business Risk:
Failure Score:

Recommendation

Commentary on assessment

Completed by:
Date completed:

Where suppliers are deemed to have a high impact of failure an annual review of their financial health should be requested
manager.

Income Statement / Profit and Loss

(a) Turnover Input Can also be called "Revenue" or "Sales"
(b) Cost of Sales Input Can also be called "Operating Expenses/Costs" or "Direct Costs"
(c) Gross Profit Calculated Turnover - Cost of Sales
 Admin Expenses Input Can also be called "Indirect Costs" or "Overheads" - Includes Distributi
(d) Operating Profit Input Enter loss as a negative, This is profit before interest and tax
(e) Interest Payable Input Interest and charges associated with cost of borrowing
(f) Net Profit Input Profit after all expenditure and distributions (interest, tax, dividends etc
Statement of Financial Position / Balance Sheet
Non-Current Assets Input Includes Intangible Assets (e.g. Goodwill) and Tangible Assets (e.g. P
(g) Current Assets Input Includes cash, debtors<1 year, stock and investments
(h) Trade Debtors Input Can also be called "Receivables"
(i) Stock Input If no stock then enter zero
(j) Current Liabilities Input All creditors < 1 year
(k) Trade Creditors Input Can also be called "Payables"
(l) External Borrowings Input Loans, debentures, overdraft, finance lease/hire purchase (excluding th
(m) Group Borrowings Input Amounts owed to group
Net Assets Input Sometimes called "Net Worth", "Capital Employed" or "Shareholders' F
Working Capital Calculated Current Assets - Current Liabilities
(n) Capital Employed Calculated Total Assets - Current Liabilities

Accountancy Ratios company is using both Red

(d)/(n) equity and debt to
ROCE (Operating Profit) <0%
generate a return
What return is the
(c)/(a) company making from
Gross Profit Margin <2%
sales and direct costs
company making after
(d)/(a)
Operating Profit Margin direct and Indirect Costs, <0%
excluding interest and
(f)/(a) What return is the
company making after all
Net Profit Margin expenditure <0%
(l)/(n) What extent is the
business reliant on
Gearing (external) external debt >75%
(m)/(n) What extent is the
business reliant on
Gearing (internal) internal debt >75%
(d)/(e)
How well does operating
Interest Cover profit cover interest costs <0
(g)/(j) How well do the current
assets cover current
Current Ratio Stricter version of the
liabilities <1
above, excludes stock as
(g)-(i)
Quick Ratio this cannot always be <0.7
(j)
converted into cash
(h)/(a) How quickly does the
quickly
Debtor Days >90
x 365days company collect its debt
How quickly does the
(k)/(b)
Creditor Days company pay its >90
x 365days
suppliers
The analysis consists of applying standard accounting ratios to understand a suppliers financial health. A red result attra
amber a score of 3, neutral a score of 2 and Green a score of 1. Efficiency ratios are weighted at 0.5 of other ratios. The
can be achieved is 40. A score for either of the two last financial years above 30 (High Impact of Supplier Failure), 33 (M
would require mitigations.
nvitation to Tender will mean the supplier needs to
ill be at the sole discretion of Hillingdon Finance

ndix A will need to be undertaken.

Period End Date

Ratio Scores

pretation
- -
- -
- -
- -
- -
-

health should be requested by the contract

Costs" or "Direct Costs"

erheads" - Includes Distribution Costs
ore interest and tax
of borrowing
s (interest, tax, dividends etc.)

and Tangible Assets (e.g. Property, Plant & Equipme

investments

se/hire purchase (excluding those with group compani

mployed" or "Shareholders' Funds/Equity"

Amber Neutral Green

<6% <18% >18%

<10% <20% >20%

<2% <5% >5%

<1.5% <4% >4%

>50% >20% <20%

>50% >20% <20%

< 1.5 <4 >4

<1.5 <2 >2

<1 <1.2 >1.2

>70 >50 <50

>70 >50 <50

ncial health. A red result attracts a score of 4,

ted at 0.5 of other ratios. The maximum score that
act of Supplier Failure), 33 (Medium) and 36 (Low)