The 6 Ratios Your Bonding Company Checks Before Raising Your Line
· By Mike Hagberg
Working capital, current ratio, debt-to-equity, revenue-to-working-capital, days in AR, and AR:AP — the year-end ratios sureties and bankers actually compute from your Sage 100 Contractor financials.
The 6 Ratios Your Bonding Company Checks Before Raising Your Line
At TUG 2026 in Salt Lake City, one of the most practical sessions walked through the exact worksheet sureties and bankers use when they review a contractor's year-end financials. None of it is exotic — six ratios, all computable straight from your balance sheet and income statement. If you run Sage 100 Contractor, every input already lives in your general ledger.
The worksheet
| Ratio | Formula | Safety zone |
|---|---|---|
| Working Capital | Current Assets − Current Liabilities | Positive and stable |
| Bonding Capacity | Working Capital × 10 | This is your line |
| Current Ratio | Current Assets ÷ Current Liabilities | 1.5–2.0 |
| Debt to Equity | Total Liabilities ÷ Total Equity | Less than 3.0 |
| Revenue to Working Capital | Annual Revenue ÷ Working Capital | Less than 30 |
| Days in AR | AR ÷ (Annual Revenue ÷ 365) | Less than 60 days |
A seventh — AR to AP — gets a glance too: receivables should comfortably cover payables (1.0–2.0).
Why working capital is the headline number
Most sureties size your bonding program by multiplying working capital by a factor — typically 10, sometimes up to 20 for strong programs. A contractor with $400,000 of working capital is looking at roughly a $4M program. Shrink working capital by $50K and you just gave up half a million dollars of biddable work.
That is why the session's two example contractors told such different stories: one with a 1.54 current ratio and 0.9 debt-to-equity sailed through review; the other — negative working capital, 0.72 current ratio — was effectively unbondable until the balance sheet was repaired.
Direction matters as much as level
A 1.6 current ratio that was 2.1 two quarters ago is a worse signal than a steady 1.5. Bankers read the trend line, so you should see it before they do — monthly, not once a year when the CPA assembles the statement.
How DataXcel watches these for you
The DataXcel CEO Briefing computes these ratios from your live Sage 100 Contractor ledger every week and alerts under the Balance Sheet category when one drifts out of the safety zone — current ratio sliding under 1.5, debt-to-equity creeping past 3, days-in-AR breaching 60. The new Banking & Bonding Ratios dashboard shows each ratio's trend so the conversation with your surety starts from your numbers, not theirs.
If December is the first time you see these six numbers, you are managing the most important constraint on your growth blind for eleven months of the year.