Audit firms use analytical procedures to find risks and assess a company's financial health. This helps them see if the company can keep operating. One example is finding signs of not having enough money to pay short-term debts, called liquidity problems.

To check liquidity, firms look at liquidity ratios. The current ratio compares current assets to current liabilities. If it's less than 1, it might mean the company can't cover short-term debts. Another ratio, the quick ratio, only looks at assets excluding inventory, giving a safer measure of liquidity.

Solvency ratios show if a company can meet long-term obligations. The debt-to-equity ratio compares total debt to equity. A high ratio may mean more risk and trouble paying long-term obligations.

Activity ratios show how well a company handles its assets. For example, the inventory turnover ratio shows how quickly inventory is sold. A low ratio suggests bad inventory management and maybe liquidity problems.

Profitability ratios show how well a company makes profits. The gross profit margin compares gross profit to revenue and shows if the company can cover costs. The net profit margin, comparing net income to revenue, shows overall profitability.

These ratios help assess if a company can keep going. They show liquidity, solvency, activity, and profitability. By studying these ratios, audit firms can spot risks like liquidity troubles, too much debt, bad asset management, or profit decline. These risks could make it hard for the company to keep operating in the long term.