2TWENTY2 S&C LTD

Executive Summary

2TWENTY2 S&C LTD has experienced a significant decline in financial health, moving from a positive to a negative net asset position and exhibiting negative working capital. Immediate focus on cash flow management, cost control, and potential capital infusion is essential to reverse this trend and stabilize the company’s financial condition.

2TWENTY2 S&C LTD - Analysis Report

Company Number: 12536049

Analysis Date: 2025-07-20 16:18 UTC

Financial Health Assessment for 2TWENTY2 S&C LTD (as of 31 March 2024)

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1. Financial Health Score: D

Explanation:
The company exhibits clear symptoms of financial distress, including negative net assets and net current liabilities, which are critical warning signs. Although the company is not yet insolvent in a legal sense, its financial position has deteriorated notably compared to previous years. The overall grade D reflects a fragile financial state requiring urgent attention to avoid further decline.

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2. Key Vital Signs:

Metric	2024 Value	Interpretation
Fixed Assets	£3,131	Modest investment in long-term assets; steady increase.
Current Assets	£11,978	Cash, receivables, and inventory available to meet short-term obligations.
Current Liabilities	£16,015	Short-term debts exceeding current assets by £4,037. A liquidity strain.
Net Current Assets (Working Capital)	-£4,037	Negative working capital indicates inability to cover short-term debts with short-term assets.
Net Assets (Shareholders’ Funds)	-£2,029	Negative equity means liabilities exceed total assets, a sign of financial weakness.
Share Capital	£100	Minimal capital injection, typical for micro entities but limits buffer capacity.
Employee Count	2 employees	Small team consistent with micro company status.

What these Vital Signs Indicate:

• Negative Working Capital is a key "symptom" of cash flow stress, meaning the company may struggle to pay suppliers or creditors on time without additional financing or cash inflows.
• Negative Net Assets suggests accumulated losses have eroded the company’s equity base, a worrying trend especially for a young company incorporated in 2020.
• The increase in current liabilities from £9,854 (2023) to £16,015 (2024) is a red flag indicating growing short-term obligations that outpace asset growth.
• The steady but small increase in fixed assets shows some reinvestment, but this is insufficient to offset the liabilities accumulation.

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3. Diagnosis:

2TWENTY2 S&C LTD is currently showing symptoms of financial distress, primarily characterized by negative net assets and negative working capital. This condition may lead to liquidity difficulties, where the company could face challenges meeting its short-term obligations without additional funding or operational improvements. The deterioration from a positive net asset position (£927 in 2023) to negative (-£2,029 in 2024) signals ongoing losses or increased liabilities that have not been matched by asset growth.

The company’s micro size and small workforce limit economies of scale, which may constrain its ability to improve profitability quickly. The absence of director loans or guarantees suggests no immediate internal financing support was introduced during the year, which could exacerbate liquidity issues.

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4. Recommendations:

To improve financial wellness and stabilize the company’s position, consider the following steps:

• Improve Cash Flow Management:
  Focus on accelerating receivables, negotiating longer payment terms with suppliers, and controlling expenses tightly to alleviate negative working capital pressures.

• Capital Injection or Financing:
  Seek additional equity investment or short-term financing to restore positive net assets and provide a buffer against immediate liquidity issues.

• Cost Control and Revenue Growth:
  Review operational costs and identify opportunities to improve profitability. Explore new business development strategies to increase sales and reduce losses.

• Regular Financial Monitoring:
  Implement monthly cash flow forecasts and management accounts to detect early warning signs and manage liquidity proactively.

• Engage Professional Advice:
  Early consultation with financial advisors or insolvency practitioners can provide tailored restructuring options before distress worsens.

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Medical Analogy Summary:

2TWENTY2 S&C LTD’s balance sheet reveals “symptoms of financial distress” akin to a patient showing early signs of illness such as low energy (negative working capital) and weakened immune system (negative equity). Without timely intervention—such as improved cash flow (nutritional support) and capital injection (medication)—the company risks sliding into more serious conditions like insolvency (organ failure). Early diagnosis and treatment can restore health and ensure sustainable business performance.

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