Conducting basic risk assessments using ACRA business information

Unique entity number (UEN) and date of incorporation

The first four digits of the UEN show the year of incorporation. The date of incorporation shows how long the company has been operating.

Issued share capital

The amount of money that shareholders have committed to the company through their shares, whether paid in full or not. 

Paid-up share capital

The amount that shareholders have actually paid for their shares.

Tip: If this amount is very small compared to your potential investment, consider whether the company has enough capital to pay its creditors if it shuts down. This also shows how much existing shareholders have committed and their willingness to take on risk.

Company officers

People responsible for managing and ensuring the company complies with regulations. This includes:

• Company directors

• Company secretaries who handle administration and legal compliance

• Board of directors who oversee the company’s business

Registration date and commencement date

These show how long the business has been operating:

• Registration date: Official date ACRA approves business registration

• Commencement date: Date declared by the registrant as their intended business commencement date

Sole proprietor

The person who owns and runs the business.

Partners

Two to 20 people who run the business together.

Local managers 

If a local manager is appointed, this means that all of the owners do not live in Singapore. 

Business Profile

This shows general company information such as: 

• Company name and incorporation date

• Business activities and registered addresses

• Capital details, such as issued and paid-up share capital

• Particulars of officers, shareholders, and the audit firm

Compliance Profile

This shows whether the company meets statutory requirements under the Companies Act 1967, such as:

• Timely holding of annual general meetings (AGMs)

• Laying of up-to-date financial statements at AGMs

• Timely filing of annual returns (ARs)

Financial Profile

This shows key highlights from up to three years of comparative data, including the:

• Balance sheet

• Profit and loss

• Cashflow

Operating profit margin (%)

[(Profit (loss), net of tax + Income tax expense + Finance costs) / Revenue] x 100

Measures the company's operating performance as a percentage of revenue.

Example: A margin of 36% means that for every $100 of revenue, the company makes $36 in profit before interest and tax.

Net profit margin (%)

[Profit (loss), net of tax / Revenue] x 100

Shows the portion of sales remaining after all costs and expenses.

Example: A margin of 7% means for every $100 of sales, $7 is available for distribution.

Return on assets (%)

(Net profit + Tax + Finance costs) / Total assets x 100

Measures how effectively the company uses its resources to generate profit.

Example: A ratio of 25% means that for every $100 in assets, the company generates $25 in profit before interest and tax for owners and creditors.

Return on equity (%)

[Profit (loss), net of tax / Total equity] x 100

Measures the profitability of capital invested by owners.

Example: A ratio of 30% means that for every $100 invested, the company yields $30 in profit for its owners.

Total liabilities to equity (Times)

Total liabilities / Total equity

Measures how much the company relies on debt.

A higher ratio indicates greater dependence on debt to finance operations.

Interest cover ratio (Times)

(Profit (loss), net of tax + Income tax expense + Finance costs) / Finance costs

Measures the company’s ability to pay interest on outstanding debt.

Type of opinion

Simplified interpretation

Official definition

Unqualified opinion

Reliable: The financial statements are reliable and presented fairly.

The auditor concludes that the financial statements give a true and fair view in accordance with applicable financial reporting standards.

Emphasis of matter (EOM)

Reliable, with a note: The statements are reliable, but the auditor highlights an important matter you should be aware of.

Highlights a matter affecting the financial statements that is discussed in a note to the financial statements. 

This does not affect the auditor's opinion

Qualified opinion

Reliable with specific concerns: The statements are mostly reliable, except for specific issues the auditor has identified.

*The auditor concludes that an unqualified opinion cannot be expressed but that the effect of any disagreement with management, or limitation on scope is not so material and pervasive as to require an adverse opinion or a disclaimer of opinion.

Disclaimer of opinion

Inconclusive: The auditor did not have enough information to form an opinion.

*This is expressed when the "possible effect of a limitation on scope is so material and pervasive that the auditor has not been able to obtain sufficient appropriate audit evidence and accordingly is unable to express an opinion on the financial statements."

Adverse opinion

Unreliable: The financial statements contain material errors or misstatements.

*This is expressed when the "effect of a disagreement is so material and pervasive to the financial statements that the auditor concludes that a qualification of the report is not adequate to disclose the misleading or incomplete nature of the financial statements.”