A7O LTD

Executive Summary

A7O Ltd demonstrates a solid financial foundation with growing net assets and strong working capital, supported by director funding. While liquidity and solvency appear healthy, reliance on internal financing is a risk factor that should be addressed. Continued focus on cash flow management and diversification of funding will enhance financial stability and support future growth.

A7O LTD - Analysis Report

Company Number: 14339546

Analysis Date: 2025-07-29 19:33 UTC

Financial Health Assessment Report for A7O Ltd

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1. Financial Health Score: B

Explanation:
A7O Ltd shows a solid and improving financial position with healthy net assets growth and strong working capital. The company benefits from good shareholder equity relative to its micro-entity scale, indicating stable capital backing. However, the reliance on director advances as a source of funding and modest current asset base suggest areas for caution and improvement.

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2. Key Vital Signs

Metric	2024 (£)	2023 (£)	Interpretation
Fixed Assets	63,909	55,320	Moderate investment in long-term assets, indicating some capital commitment to operations.
Current Assets	13,681	1,080	Noticeable improvement, reflecting better liquidity or receivables management.
Current Liabilities	(31,200)	(15,991)	Increase in short-term obligations, but manageable with improved current assets.
Net Current Assets	44,881	17,071	Strong positive working capital, a sign of healthy short-term financial stability.
Net Assets (Equity)	108,790	72,391	Increasing equity base signals retained profits or capital injection, strengthening solvency.
Director’s Loan Account	61,016	29,606	Significant director funding; a symptom of reliance on internal financing rather than external.

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3. Diagnosis: Financial Condition Analysis

• Healthy Cash Flow and Liquidity:
  The surge in current assets, particularly cash or receivables, combined with net current assets of nearly £45k, indicates the company maintains a healthy liquidity buffer. This is critical as it ensures the business can meet its short-term demands without distress.

• Balance Sheet Strength:
  Net assets have grown by approximately 50% year-on-year, which is a positive symptom of financial robustness for a micro-entity. This reflects either accumulated profits or additional capital input, strengthening the company’s solvency.

• Dependence on Director Funding:
  The director's loan account has doubled in one year to over £61k. While this internal funding can be a lifeline for small companies, it also indicates potential limitations in external financing or cash flow. This is a "symptom" that should be monitored closely to avoid future liquidity strain if the director's position changes.

• Modest Operational Scale:
  With only one employee and micro-entity status, operational complexity and financial risk are relatively low. However, growth potential may be constrained unless investment or additional resources are secured.

• No Audit Requirement and Compliance:
  The company benefits from micro-entity accounting standards with exemption from audit, reducing compliance costs but limiting external financial scrutiny.

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4. Recommendations

• Diversify Funding Sources:
  Explore alternative financing options such as small business loans or investor capital to reduce reliance on the director’s loan. This will improve financial resilience and reduce personal risk to the director.

• Enhance Cash Management:
  Continue improving cash flow management to maintain or increase current assets, focusing on timely invoicing and receivables collection, to ensure liquidity remains strong.

• Plan for Growth Investment:
  Consider reinvesting profits or attracting partners to fund expansion initiatives in the management consultancy sector. Fixed assets and operational scale suggest capacity to grow with additional resources.

• Regular Financial Monitoring:
  Maintain quarterly reviews of key financial metrics to detect early signs of distress, such as rising liabilities or shrinking net assets, ensuring timely corrective action.

• Maintain Compliance and Filing Discipline:
  Keep up to date with filing deadlines and statutory requirements to avoid penalties and maintain good standing.

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