Ratio analysis is a basic tool for investors, creditors and auditors: it identifies strengths and weaknesses and helps to benchmark companies across industries. Secure computation introduces the use of private information into ratio analysis to make it even more powerful.
On one side, the company specifies the private balance sheet and income statement:
On the other side, the auditor inputs minimal and cutoff private values for the ratios:
Together, they securely compute profitability, leverage and liquidity ratios to determine if the audit is unqualified, qualified or adverse.
The preceding is just a simplified example for illustrative purposes. In the real world, you will have to change the concrete parameters and use more complex formulas.