4D SERVICES (STOURPORT) LIMITED

Executive Summary

4D SERVICES (STOURPORT) LIMITED is currently experiencing significant financial stress marked by negative net assets and liquidity shortages. The company faces increasing short-term liabilities and a working capital deficit, signaling urgent need for cash flow management and liability restructuring to avoid insolvency. With focused operational improvements and financial discipline, the company can stabilize and improve its financial health.

4D SERVICES (STOURPORT) LIMITED - Analysis Report

Company Number: 13636832

Analysis Date: 2025-07-29 14:53 UTC

Comprehensive Financial Health Assessment for 4D SERVICES (STOURPORT) LIMITED

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1. Financial Health Score: D

Explanation:
The company is showing clear symptoms of financial distress. Its net assets have turned negative in the latest year, and it is carrying significant current liabilities exceeding its current assets, indicating working capital strain and potential liquidity concerns. While it is still operational and filing on time, the deteriorating balance sheet and increasing liabilities reflect a fragile financial condition requiring urgent attention.

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2. Key Vital Signs (Core Financial Metrics):

Metric	2024 (£)	2023 (£)	Interpretation
Current Assets	6,600	4,355	Slight improvement in assets; includes cash and stock
Cash	3,005	743	Cash position improved but still low compared to liabilities
Current Liabilities	19,030	6,265	Sharp increase in short-term debts – alarming stress signal
Net Current Assets	-12,430	-1,910	Negative working capital, worsening liquidity
Net Assets	-5,590	1,207	Equity turned negative – "balance sheet anemia"
Shareholders’ Funds	-5,593	1,207	Reflects accumulated losses exceeding equity
Tangible Fixed Assets	6,840	3,630	Modest asset base; some investment in fixtures and vehicles

Interpretation:

• The company’s liquidity is strained, with current liabilities more than triple current assets, indicating difficulty in meeting short-term obligations—a symptom akin to a patient with poor circulation struggling to supply vital nutrients.
• Negative net assets suggest the company’s total liabilities exceed its assets, signaling insolvency risk if the trend continues.
• The cash position has improved, which is a positive sign, but it’s still insufficient to cover immediate debts.
• Tangible fixed assets have increased, showing some investment in operational capacity, but this is overshadowed by the liabilities surge.

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3. Diagnosis: Financial Condition Assessment

The company is exhibiting classic symptoms of financial distress:

• Liquidity Crisis: The negative net current assets (-£12,430) indicate that the company cannot cover its short-term debts with its liquid assets, posing a risk to ongoing operations.
• Balance Sheet Weakness: The shift from positive net assets in 2023 (£1,207) to negative net assets in 2024 (-£5,590) suggests accumulated losses and potential insolvency concerns. This "balance sheet anemia" reduces its ability to secure external financing or credit.
• Increased Creditors: The jump in current liabilities from £6,265 to £19,030 within one year signals increased borrowing or delayed payments, possibly due to cash flow problems or higher operating costs.
• Modest Asset Base: While fixed assets have grown, they remain modest relative to liabilities and may not be easily liquidated to cover debts.
• Directors’ Change: Two directors resigned in early 2025, which could indicate internal governance changes or responses to financial challenges.

Overall, the company is in a precarious position, with symptoms indicating distress but still operational. Immediate intervention is necessary to avoid deterioration into insolvency or forced liquidation.

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4. Recommendations: Steps to Improve Financial Wellness

1. Improve Cash Flow Management:

   • Tighten credit control to accelerate debtor collections (note: debtors currently nil).
   • Negotiate extended payment terms with suppliers to ease short-term cash outflows.
   • Control and reduce discretionary expenses to preserve cash.

2. Address Working Capital Deficit:

   • Convert stock into sales more quickly to free up cash trapped in inventory.
   • Consider short-term financing options (e.g., invoice financing) to bridge cash gaps, but cautiously to avoid over-leveraging.

3. Restructure Liabilities:

   • Engage creditors to renegotiate debt terms, potentially converting short-term liabilities to longer-term ones to reduce immediate pressure.
   • Explore injection of fresh equity or shareholder loans to strengthen the balance sheet.

4. Operational Review:

   • Evaluate cost structure and operational efficiency to improve profitability and reduce losses that erode equity.
   • Assess the viability of business lines and assets to identify non-core elements that can be divested.

5. Governance and Reporting:

   • Ensure transparent and regular financial reporting to stakeholders and creditors to build confidence.
   • Consider appointing financial advisors or restructuring specialists to develop a turnaround plan.

6. Monitor Financial Health Regularly:

   • Track liquidity ratios, net assets, and cash flow monthly to catch early signs of trouble.
   • Maintain compliance with filing deadlines to avoid penalties and reputational harm.

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Medical Analogy Summary:

The company’s financial health is akin to a patient with low blood pressure and poor circulation—its “vital signs” (liquidity and net assets) are weak, indicating the business is struggling to deliver “nutrients” (cash) to sustain operations. Without prompt intervention to stabilize cash flow and strengthen the balance sheet, the risk of “organ failure” (insolvency) increases. However, with appropriate management and support, recovery is possible.

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