I recently contributed to an Inc. Magazine article devoted to the analysis of financial metrics.  Click on the following link to see a copy of the article.

Inc Magazine: Quartlery Financial Report - How do you stack up?

While the focus of the article was to give business owners some base line metrics to measure performance, judging the health of a business should not be limited to whether the financial ratios are in line with the industry standards.  Healthy businesses can deviate from the industry standards for a number of reasons. 

For example, a business may find that its customer mix is heavily weighted to long term government contracts that are traditionally slow payers.  This will result in a Days Sales Outstanding (DSO) ratio that may be higher than the industry average.  However, due to the high likelihood of collection, this business may be in a better financial position than its peer group.

The article also brought up a good point on trends.  Ratios are typically a reflection of financial performance for a point in time.  To better understand the health of a business, look at the trend for a number or periods.  When comparing periods, take into consideration changes to product lines, customer mix and seasonality.