Company Number: 13129802

Analysis Date: 2025-07-20 12:22 UTC

Financial Health Assessment of A DAVIS CONSULTANCY LTD

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1. Financial Health Score: B

Explanation:
The company demonstrates solid net asset growth, healthy working capital, and an improving balance sheet structure. The presence of fixed assets in the latest year indicates investment in long-term resources. However, moderate long-term liabilities and a small share capital base limit a top-tier grade. Overall, the financial "vital signs" show a stable and growing business with manageable risk.

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2. Key Vital Signs

Metric	2024 Value (£)	Interpretation
Fixed Assets	33,164	Introduction of fixed assets suggests investment in business infrastructure – a positive sign of growth and stability.
Current Assets	144,825	Healthy level of assets readily convertible to cash, indicating good liquidity.
Current Liabilities	52,072	Short-term obligations are well covered by current assets; positive for operational liquidity.
Net Current Assets (Working Capital)	92,753	Significant positive working capital ("healthy cash flow cushion"), indicating ability to meet short-term debts and invest in operations.
Creditors due after one year	21,381	Some long-term debt exists, requiring monitoring but not excessive given asset base.
Total Net Assets (Shareholders’ Funds)	104,536	Strong equity base, increasing from £342 in 2021 to over £104k in 2024, reflecting retained earnings and capital growth.
Share Capital	100	Very small initial capital, typical for micro-entity, but equity growth mainly from retained profits or reserves.

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3. Diagnosis

A DAVIS CONSULTANCY LTD exhibits the "symptoms" of a financially healthy and growing small business. The company started with very modest resources in 2021 but has steadily built up net assets and working capital over the last three years. The appearance of fixed assets in 2024 shows reinvestment into the business, which is a positive sign for sustainable operations.

The substantial positive net current assets indicate the company has a comfortable buffer to cover short-term liabilities, reducing liquidity risk and enabling operational flexibility. The presence of long-term creditors is a symptom to monitor but is not alarming given the asset coverage.

The company’s financial condition suggests it is not distressed; rather, it is in a growth phase with stable cash flow management and a strengthening balance sheet. The small share capital is typical for micro-entities but means that the company’s strength lies primarily in its accumulated profits and working capital.

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4. Recommendations

• Monitor Long-Term Liabilities: Keep track of long-term creditors to ensure debt servicing remains manageable as the company grows.
• Maintain or Improve Working Capital: Continue managing receivables, payables, and inventory to sustain the healthy working capital position, ensuring operational liquidity.
• Consider Capital Injection: Although current equity is strong, a modest increase in share capital could improve financial flexibility and support further investment.
• Cash Flow Forecasting: Implement regular cash flow forecasting to detect any early "symptoms" of liquidity strain especially if business expands or invests heavily.
• Asset Utilisation Review: Evaluate the return on fixed assets to confirm that investments are generating expected economic benefits.
• Compliance and Reporting: Ensure timely submission of accounts and confirmation statements to avoid penalties and maintain good standing.

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