ABSOLUTE IP LTD

Executive Summary

ABSOLUTE IP LTD demonstrates solid financial health for a young micro-entity, with improving liquidity and equity. The company shows healthy cash flow and manageable liabilities but should monitor its rising provisions closely to mitigate potential risks. With prudent financial management and strategic growth planning, ABSOLUTE IP LTD is positioned for stable development.

ABSOLUTE IP LTD - Analysis Report

Company Number: 14449657

Analysis Date: 2025-07-20 14:57 UTC

Financial Health Assessment Report for ABSOLUTE IP LTD

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1. Financial Health Score: B

Explanation:
ABSOLUTE IP LTD shows signs of solid foundational health for a micro-entity in its early years. The company’s net current assets and net assets have improved significantly over the last year, indicating strengthening liquidity and equity position. However, the presence of provisions for liabilities and the relatively small scale of operations suggest cautious optimism rather than full financial robustness. The score “B” reflects a generally healthy financial condition with room for growth and risk management improvements.

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2. Key Vital Signs

Vital Sign	Latest Value (2024)	Interpretation
Current Assets	£7,587	Healthy increase – reflects growing cash or receivables available to meet short-term needs.
Current Liabilities	£991	Low short-term obligations – manageable for current asset levels.
Net Current Assets (Working Capital)	£6,596	Positive and growing working capital – indicates good short-term liquidity (“healthy cash flow”).
Net Assets (Equity)	£1,696	Positive but modest equity base – company retains value after liabilities.
Provision for Liabilities	£5,000	Notable increase – represents potential future outflows or risks the company is accounting for (“symptoms of caution”).
Shareholders Funds	£1,696	Matches net assets – shareholders have a positive stake but limited buffer.
Average Number of Employees	1	Micro entity with minimal personnel – lean operations likely reduce overheads.

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3. Diagnosis

ABSOLUTE IP LTD, incorporated in late 2022, is a young micro-entity operating in a niche telecommunications sector (SIC 61900). The financial statements reveal a company that is building its asset base and improving liquidity steadily. The jump in current assets from £1,008 to £7,587 in 2024 reflects enhanced operational cash or receivables, a vital sign of “healthy cash flow” for sustaining daily activities.

The company maintains low current liabilities, which combined with positive net current assets, indicates it can comfortably meet its short-term obligations without stress. The shareholders’ funds and net assets have nearly doubled, suggesting retained earnings or fresh capital injections, enhancing the financial “immune system.”

However, the increased provision for liabilities—from £1,000 in 2023 to £5,000 in 2024—signals the company is anticipating potential future expenses or contingencies. This is a cautionary symptom that requires close monitoring to ensure these do not escalate into actual financial distress.

The resignation of one director in April 2024 and continued control by two directors with significant influence appears stable, with no red flags in governance or compliance. The company is timely with filings and not overdue, which is an important administrative health indicator.

Overall, ABSOLUTE IP LTD exhibits the financial “vital signs” of a young but stable business with manageable risks and positive liquidity. The modest scale and micro-entity status mean that growth and risk management should be carefully balanced.

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4. Recommendations

1. Monitor Provisions Closely:
   Investigate the nature of the increased provisions. Ensure these liabilities are well understood and managed to prevent erosion of equity or liquidity.

2. Strengthen Equity Base:
   Consider strategies to build shareholder funds further, such as reinvesting profits or modest capital injections, to create a stronger financial buffer.

3. Enhance Cash Flow Management:
   Maintain and improve cash conversion cycles. Given the increase in current assets, focus on timely collection of receivables and efficient use of available cash.

4. Plan for Growth:
   With one employee and a micro-scale operation, explore opportunities for measured scale-up that align with market demand and maintain lean operations to protect margins.

5. Governance and Compliance:
   Continue timely filing of accounts and confirmation statements to avoid regulatory penalties and maintain good standing with Companies House. Ensure directors’ roles are clearly defined and any changes are promptly communicated.

6. Risk Mitigation:
   Develop contingency plans for the liabilities that the provisions cover, possibly including insurance or contractual safeguards.

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