Profitability
Not enough informationAdd revenue, direct costs, operating expenses, and debt payment values to see monthly profitability.
Track pricing and fixed costs first, then refine with one month of data.
Continue with these numbersBusiness Health Check
Run a monthly business health check across revenue, costs, debt, owner hours, and cash reserve to estimate margin, runway, and owner economics.
Gross Profit
—
Revenue minus direct costs
Gross Margin
—
Gross profit as a % of revenue
Estimated Operating Profit
—
Gross profit minus operating expenses and debt payments
Operating Margin
—
Operating profit as a % of revenue
Monthly Cash Surplus (before owner distribution)
—
Illustrative operating cash after fixed expenses and debt
Break-even Revenue
Not enough information
Assumes direct cost ratio and fixed costs stay stable
Debt Payment Ratio
Not enough information
Debt compared to operating cash before owner draw
Effective Owner Hourly Earnings
—
Operating surplus divided by owner hours
Estimated Cash Runway
Not enough information
Requires monthly cash deficit and reserve inputs
Decision cards
Cost structure
Not enough informationDirect and operating costs need both values to show how much of each sale is consumed by costs and overhead.
Enter direct and operating costs, then compare both ratios in the same month.
Continue with these numbersBreak-even
Not enough informationBreak-even revenue is not computable with the current figures. You need positive revenue and a valid direct-cost ratio.
Use realistic direct cost assumptions and test with break-even scenarios.
Continue with these numbersDebt load
Not enough informationDebt ratio cannot be calculated until you provide revenue, direct costs, operating expenses, and debt amount.
If debt changes month to month, compare a 3-month average before acting.
Continue with these numbersCash runway
Not enough informationAdd cash reserve and ensure operating cash is negative to estimate how many months your reserve may cover this pace.
Set a realistic reserve target and compare against different downside scenarios.
Continue with these numbersOwner economics
Not enough informationNeed a valid monthly surplus and owner hours worked to estimate an hourly figure for planning.
Use the owner-hour value once you have consistent monthly operations data.
Explore next actionContinue with these numbers
Interpretation (not universal guidance)
A healthy-looking margin for one month is not a guarantee for next month. Trends and category-level consistency matter more than a single data point.
Treat this check as a structured conversation starter: identify one lever, test it, then re-run with updated inputs.
If direct costs rise quickly with volume, your margin can collapse before operating costs show up. If operating expenses rise first, your pricing model may need revision.
What to do next
Once you confirm your baseline, use the scenario flow: improve one input at a time (price, direct cost, debt, or payroll timing), then compare again.
Result actions
Was this calculator helpful? Share it with other business owners.
What is the Business Health Check?
The Business Health Check is a monthly decision tool that combines your most important financial levers into one compact result set: revenue, direct costs, operating expenses, debt service, owner workload and reserve. It helps you estimate how your business model is performing and where to test next.
How this health check is calculated
The page uses a simple deterministic model:
Health check formula summary
- Gross Profit = Revenue − Direct Costs
- Operating Profit = Gross Profit − Operating Expenses − Debt Payments
- Cash Surplus (before owner draw) = Operating Profit
- Break-even Revenue = Operating fixed costs ÷ (1 − Direct Cost Ratio)
- Cash Runway = Operating Cash Flow Before Draw ÷ Monthly Cash Deficit
Assumptions in this tool
- Direct/variable cost ratio is assumed to stay near your current month as a planning approximation.
- Operating expenses and debt payments are treated as fixed within the analyzed month.
- Runway is an educational estimate that assumes the same monthly shortfall and no financing changes.
- All values are educational planning estimates for your specific inputs and should not be treated as financial advice.
How to use this result
- Start with the cards above: Profitability, Cost Structure, Break-even, Debt Load, Cash Runway, Owner Economics.
- Use only one decision lever per test (for example, price first, then cost, then debt schedule).
- Capture a few months of input history before concluding the direction for a change.
The strongest signal comes from repeated runs, not one snapshot.
Limits of this health-check version
- This is a planning signal, not a full accounting model. It does not account for taxes, asset depreciation, growth investments, receivables aging, or changing debt covenants.
- Break-even and runway outputs are sensitive to one-period stability assumptions and will shift when cost mix or volume changes.
- The model is intentionally educational and should be paired with your accounting records before financial commitments.
Methodology & Accuracy
How this calculator produces its results, and the limits you should keep in mind when using them.
- Formula source
- The result is produced by the exact mathematical formula shown on this page. The formula is derived from the definition of the relationship between the inputs and the output (for example, profit margin is profit divided by revenue by definition). Where a formula relies on an external rule, rate, or convention, the authoritative source supporting that claim is linked in the Sources section below. The calculation has not been certified or approved by any professional body.
- Assumptions
- Calculations assume the figures you enter are accurate and apply to your situation. These are simplified models that may not capture every business scenario, and the estimates depend entirely on the values you select.
- Uncertainty and limitations
- Results are estimates based on the information entered. Actual financial outcomes may differ depending on business circumstances, market conditions, taxes, location, and other factors.
- Tested with sample inputs
- Tested with $24,000 revenue, $8,000 direct costs, $7,000 operating expenses and $1,200 debt: gross profit $16,000, operating profit $7,800, and a $4,800 break-even estimate under a fixed-cost ratio assumption.
- Ownership and testing
- This calculator is maintained by Small Business Finance Toolkit. Its calculation can be checked using the sample figures shown on this page. It has not been certified or reviewed by a licensed financial professional. Found an error or outdated information? Contact us.
- Review status
- Sample checks are listed above where available. This page is documented as an educational tool and is updated before major edits using a documented review process.