Financial Health Check

Deloitte: Compute key financial ratios for a client's last two fiscal years and summarize the change.

Assignment

You're an analyst at Deloitte working on an engagement for a software client. The partner has asked for a financial health check ahead of a board meeting: compute the key ratios from the client's last two fiscal years and summarize what they say about profitability, liquidity, and leverage. The client's finance team has exported the income statement and balance sheet in a long line-item format.

Deliverables

• Net profit margin for FY2024 and FY2025.
• Current ratio and quick ratio for both years.
• Debt-to-equity and return on equity for both years.
• A short closing report for the partner: how the client's financial position changed between the two years, with any caveats they should know about before presenting, and anything they should double-check before relying on the numbers.

Definitions.

• Net profit margin $= \dfrac{\text{net income}}{\text{revenue}}$
• Current ratio $= \dfrac{\text{current assets}}{\text{current liabilities}}$
• Quick ratio $= \dfrac{\text{current assets} - \text{inventory}}{\text{current liabilities}}$
• Debt-to-equity $= \dfrac{\text{total liabilities}}{\text{total equity}}$
• Return on equity $= \dfrac{\text{net income}}{\text{total equity}}$

Data Description

Both statements are in long format: one row per line item per fiscal year.

deloitte_client_income_statement.csv:

• line_item - name of the income statement line, e.g. revenue
• fiscal_year - FY2024 or FY2025
• amount

deloitte_client_balance_sheet.csv:

• line_item
• statement_section - the section the line belongs to, e.g. current_asset, noncurrent_liability
• fiscal_year
• amount

Practicalities

You can solve this in Python, SQL, or a mix of both — StrataScratch notebooks support both languages in the same notebook.

Assume this data comes directly from the client's accounting export and hasn't been cleaned, so review it carefully before relying on the numbers. When something looks off, work out what it is and decide how to handle it; when a definition or a final decision is genuinely ambiguous, choose a reasonable option and explain why. There's often more than one valid way to compute a result, so explain the approach you take and the reasoning behind your choices.

What's assessed: your results, and how clearly you explain what you see in the data and justify the choices you make.