How to read a client's or supplier's accounts in 20 minutes

In short: you do not need to be an analyst to read a client's or supplier's accounts. Take the latest filed accounts from the Companies Register, look at the balance sheet (net equity, debts, liquidity, receivables) and the income statement (revenues, margin, interest, profit). Six figures are enough to decide on credit, bearing in mind that the accounts are a snapshot that is months old.

Where to find another company's accounts

Joint-stock companies (società di capitali) file their accounts with the Companies Register. For S.r.l. companies, art. 2478-bis c.c. requires the accounts to be submitted to the members within 120 days of the year end (with a longer period possible in the cases of art. 2364 c.c., but in any case not beyond 180 days) and filed within thirty days of approval. Art. 2435 c.c. sets the same thirty-day period for filing.

The accounts can be requested from the Companies Register website (registroimprese.it), in the section for official documents, or you may find them already reclassified in a report. Keep two things in mind:

• they are always dated: with these deadlines, the most recent accounts you find may refer to a year that closed many months earlier;
• not everyone files them: the obligation to file formal accounts applies to joint-stock companies; partnerships prepare an annual statement that is not filed or published. For a sole proprietorship or a general partnership (S.n.c.) there is simply no public set of accounts to read (in that case see the guide on how to assess a supplier without filed accounts).

The balance sheet in five minutes

The balance sheet follows the format of art. 2424 c.c.: on the left the assets (what the company owns), on the right the liabilities (how it financed them). For anyone extending credit, four items matter most:

• A) Net equity (liabilities): the company's own funds. If it is low relative to its debts, whoever lends money or goods to the company takes almost all the risk. If it is negative, read the guide on how to tell from the accounts whether a supplier is about to fail.
• D) Debts (liabilities): the law requires the amounts due beyond the following financial year to be shown separately. This lets you distinguish debts payable within twelve months from long-term ones. In the full accounts you also see the individual sub-items: debts to banks, to suppliers, to the tax authorities, to social security institutions.
• C.IV) Cash and cash equivalents (assets): bank deposits and cash at the year end.
• C.II) Receivables (assets): in the full accounts, trade receivables are shown separately. If they grow much faster than revenues, the company is collecting slowly, and it may also be paying you slowly.

The income statement in five minutes

The income statement follows the scaled format of art. 2425 c.c. It is read from top to bottom:

• A) Value of production, with item A1 sales revenues and services: this is the year's turnover on an accruals basis;
• B) Costs of production: materials, services, use of third-party assets, personnel (B9), depreciation and write-downs (B10), provisions (B12 and B13), other operating charges (B14);
• difference between value and costs of production (A - B): the result of operating management, after depreciation;
• C) Financial income and charges, with item C17 interest and other financial charges: how much the company's debt costs it;
• item 21, profit or loss for the year: the final result, after taxes.

Gross operating margin (MOL or EBITDA) is not an item in the statutory format: a transparent way to derive it is to add depreciation and provisions to the difference A - B. How to do it, why two analysts can reach different numbers and what it tells you are explained in the dedicated guide linked below.

The six numbers to look at before extending credit

Always look at at least two financial years: the accounts report the previous year's figure for each item too. A single number says little; its direction says much more. To turn these figures into a credit amount, follow the guide on how to calculate a client's trade credit line; if the client closed with a loss, there is a guide on what to do with a client in loss.

What the accounts do not tell you

• They do not say how the company is today. They show the position at the year end. Protests, insolvency proceedings or a change of directors that happened afterwards are not there, unless the notes to the accounts report them among the significant events after the year end.
• They do not say whether the company pays on time. Debts to suppliers appear as a total amount, not as overdue debts.
• They are not cash. A profit can coexist with a cash balance that is emptying, for example if customers pay later and later. For cash flows you need the cash flow statement, which however companies with abbreviated accounts and micro-companies are not obliged to prepare (art. 2435-bis and art. 2435-ter c.c.).
• Abbreviated accounts show less detail. The abbreviated balance sheet includes only the items with capital letters and Roman numerals: you see total debts, split between those due within and beyond the following financial year, but not how many are owed to banks and how many to suppliers.
• They contain estimates. The value of receivables, inventories and depreciation depends on the directors' assessments. The notes to the accounts explain the criteria used, where there are any.

Guides for going deeper

EBITDA and MOL. How they are derived from the statutory income statement, what the difference between the two terms is, and why a positive margin does not guarantee that the client will pay you. Read Client EBITDA and MOL: what they tell you before extending credit.

DSCR. The ratio that compares cash flows with debt instalments: formula, how to approximate it from filed accounts, and what the Business Crisis Code says today. Read DSCR of a client or supplier: how to calculate it from the accounts.

Cash flow statement. The three flows (operating, investing, financing) and the signals to look for when the client publishes it. Read a client's cash flow statement.

Notes to the accounts. Commitments and off-balance-sheet guarantees, debts secured by collateral, related-party transactions, events after the year end: the pages almost nobody reads, and which often say more. Read what to look for in the notes to the accounts.

Abbreviated and micro-company accounts. Most SMEs file a simplified set of accounts: what you can still read in them and what is missing. Read Abbreviated accounts and micro-companies: what you can read about a client.

Liquidity and net financial position. The ratios that show whether a supplier can meet its short-term deadlines and how much it owes to banks and lenders. Read Liquidity ratios and net financial position of a supplier or a client.

Sources

• Art. 2424 c.c., contents of the balance sheet (Brocardi.it) (accessed 2026-11-01)
• Art. 2425 c.c., contents of the income statement (Brocardi.it) (accessed 2026-11-01)
• Art. 2435 c.c., filing of the accounts, with a note on partnerships (Brocardi.it) (accessed 2026-11-01)
• Art. 2478-bis c.c., accounts of the S.r.l. (Brocardi.it) (accessed 2026-11-01)
• Art. 2364 c.c., deadline for approving the accounts (Brocardi.it) (accessed 2026-11-01)
• Art. 2427 c.c., contents of the notes to the accounts (Brocardi.it) (accessed 2026-11-01)
• Art. 2435-bis c.c., abbreviated-form accounts (Brocardi.it) (accessed 2026-11-01)
• Art. 2435-ter c.c., micro-company accounts (Brocardi.it) (accessed 2026-11-01)
• Companies Register, services for requesting official documents and annual accounts (accessed 2026-11-01)