394FM LIMITED

Executive Summary

394FM LIMITED is currently experiencing significant financial distress, characterized by critically low cash reserves and negative working capital. Immediate corrective actions focusing on liquidity improvement, creditor negotiations, and capital infusion are essential to restore financial stability and avert insolvency risks.

394FM LIMITED - Analysis Report

Company Number: SC679194

Analysis Date: 2025-07-29 20:31 UTC

Financial Health Assessment of 394FM LIMITED as at 29 April 2024

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1. Financial Health Score: D

Explanation:
394FM LIMITED exhibits several concerning signs in its latest financial snapshot, notably a significant negative net current assets position and negative shareholders' funds. While the company was in better shape the previous two years, the sharp deterioration in liquidity and equity indicates financial distress. Hence, a grade of D reflects a weak financial condition requiring urgent attention.

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2. Key Vital Signs

Metric	29-Apr-2024	29-Apr-2023	Interpretation
Current Assets (£)	40	2,791	Severe drop in short-term assets—alarming sign.
Cash (£)	34	2,639	Cash reserves nearly depleted—critical symptom.
Debtors (£)	6	152	Reduced receivables, possibly indicating lower sales or collection issues.
Current Liabilities (£)	2,087	2,168	High near-term obligations remain largely unchanged.
Net Current Assets (£)	-2,047	623	Negative working capital—warning of liquidity crisis.
Total Assets Less Current Liabilities (£)	-1,648	623	Overall asset coverage insufficient to meet current liabilities.
Shareholders’ Funds (£)	-1,649	623	Negative equity signals accumulated losses or financial strain.

Interpretation of Vital Signs:

• The healthy cash flow seen in prior years has collapsed, now showing symptoms of severe liquidity distress with only £34 in cash against over £2,000 in short-term liabilities.
• The company’s working capital (net current assets) has shifted from a positive buffer to a critical deficit, suggesting it cannot cover its immediate debts from its liquid assets.
• Negative shareholders’ funds indicate that the company’s liabilities exceed its assets, a symptom akin to a patient whose vital organs are failing.
• The tangible fixed assets have a modest net book value of £399 but are insufficient to offset current liabilities.

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3. Diagnosis

394FM LIMITED is currently in financial distress, exhibiting symptoms similar to a patient suffering acute organ failure in key areas:

• Liquidity Crisis: The company has dangerously low cash reserves relative to its debts due within a year, implying potential difficulties meeting immediate obligations without external intervention or asset sales.
• Capital Deficiency: Negative equity suggests the company has accumulated losses or other financial imbalances, reducing its ability to absorb shocks or invest in growth.
• Declining Operational Performance or Market Conditions: The sharp drop in debtors and current assets hints at either reduced sales, impaired collection efforts, or asset disposals, all red flags for ongoing viability.
• Going Concern Considerations: Although the director affirms a going concern basis, the financials show warning signs that must be addressed urgently to avoid insolvency risk.

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4. Recommendations for Financial Wellness Improvement

To stabilize and restore financial health, 394FM LIMITED should consider the following actions:

• Improve Cash Flow Management: Immediate focus on accelerating receivables collection and conserving cash. Evaluate non-essential expenditures and delay discretionary payments.
• Renegotiate Short-Term Liabilities: Engage creditors to restructure or extend payment terms, reducing near-term cash flow pressure.
• Capital Injection: Explore options for equity financing or director loans to replenish shareholders’ funds and shore up net assets, akin to vital life support for a failing patient.
• Operational Review: Conduct a thorough review of revenue streams and cost structure to identify and correct underlying causes of asset depletion and declining working capital.
• Financial Monitoring: Implement more frequent internal financial reviews to detect early symptoms of distress and respond proactively.
• Professional Advice: Consider consulting insolvency practitioners or turnaround specialists if liquidity issues worsen or recovery seems uncertain.

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Executive Summary