Company Number: 12831307

Analysis Date: 2025-07-19 12:07 UTC

Financial Health Assessment Report: Absolute Chiropractic Limited

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1. Financial Health Score: C

Explanation:
Absolute Chiropractic Limited shows a mixed financial health profile. While the company has positive net assets and shareholder funds, there is a significant deterioration in working capital (net current assets) in the latest year, which raises concerns about short-term liquidity. The company’s financial position is stable but shows signs of strain that require timely intervention for improved cash flow management.

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2. Key Vital Signs

Metric	2024 (£)	2023 (£)	Interpretation
Current Assets	45,952	40,980	Slight increase, mainly cash, indicating liquidity but needs scrutiny due to liabilities surge.
Cash	45,952	35,907	Healthy cash balance increase, positive sign for liquidity.
Current Liabilities	89,278	6,753	Sharp increase in short-term liabilities—potential warning sign of liquidity pressure.
Net Current Assets (Working Capital)	-43,326	34,227	Negative working capital in 2024 signals liquidity stress—company owes more short-term than it owns.
Net Assets (Equity)	29,097	37,847	Positive equity but decreased by ~23%, reflecting retained earnings or asset value erosion.
Tangible Fixed Assets	72,423	3,620	Significant increase indicating capital investment—likely equipment or facilities expansion.
Share Capital	1	1	Minimal share capital—ownership concentration risk if financial issues arise.
Number of Employees	2	1	Slight increase in workforce, possibly supporting growth or increased operations.

Interpretation of Vital Signs:

• The negative working capital is the chief "symptom of distress" here, indicating that the company may struggle to cover short-term obligations with its liquid assets.
• The large increase in current liabilities (from £6,753 to £89,278) is a red flag, suggesting the company has taken on significant short-term debts or payables that could pressure cash flow.
• The increase in fixed assets shows the company is investing in longer-term operational capacity, which is positive but could also strain cash if not managed properly.
• Despite the liquidity concerns, the company maintains positive net assets and shareholder equity, which is a "healthy pulse" indicating solvency at the balance sheet level.
• The concentration of control with a single director and owner (Mr. Thomas Andrew Doig) means decision-making is streamlined but could also introduce governance risks if diversification of oversight is lacking.

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3. Diagnosis

Absolute Chiropractic Limited is currently experiencing early-stage financial strain, primarily due to deteriorating liquidity marked by negative working capital and a large increase in current liabilities. This situation may be due to increased operating expenses, delayed receivables, or short-term financing to support recent capital investments.

The company’s investment in tangible fixed assets suggests a strategic move to grow or improve service capacity, but this has come at the cost of short-term liquidity. The absence of trade debtors in 2024 (compared to £5,073 in 2023) could imply either improved collection or reduced sales on credit.

The positive net assets and shareholder funds serve as a reassuring foundation—indicating that despite liquidity issues, the company remains solvent and not over-indebted overall.

In medical terms, the company’s "heart" (equity base) is stable, but it shows symptoms of "circulatory issues" (cash flow and working capital problems) that require attention to avoid the risk of "organ failure" (insolvency or insolvency pressures).

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4. Recommendations

1. Liquidity Management:

   • Conduct a detailed cash flow forecast to monitor inflows and outflows monthly.
   • Prioritize collection of any outstanding receivables and negotiate longer payment terms with creditors to ease short-term pressures.
   • Consider short-term financing options cautiously to bridge liquidity gaps without overleveraging.

2. Cost Control:

   • Review operating expenses for possible reductions or efficiencies to improve cash conservation.
   • Evaluate the necessity and timing of further capital expenditures to balance growth with cash availability.

3. Working Capital Optimization:

   • Develop strategies to improve working capital, such as inventory management or renegotiation of supplier contracts.
   • Explore invoice financing or factoring if receivables become a cash flow bottleneck.

4. Governance and Risk Management:

   • Consider diversifying management input or adding advisory support to enhance oversight and decision-making.
   • Maintain close communication with stakeholders, including suppliers and lenders, to build trust during the liquidity crunch.

5. Regular Financial Health Checks:

   • Implement quarterly financial reviews to monitor the vital signs and adjust strategies proactively.
   • Use financial dashboards or KPIs to track liquidity ratios, debt levels, and equity health.

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