ACADEMY OF MOVEMENT LTD

Executive Summary

Academy of Movement Ltd is experiencing significant liquidity challenges with negative working capital and a sharp rise in current liabilities, placing it in a fragile financial state. Immediate focus on cash flow management and liability reduction is critical to stabilizing operations. Strengthening equity and controlling costs will be essential for long-term financial wellness and sustainable growth.

ACADEMY OF MOVEMENT LTD - Analysis Report

Company Number: 12953095

Analysis Date: 2025-07-29 20:08 UTC

Financial Health Assessment: Academy of Movement Ltd

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1. Financial Health Score: D

Explanation:
Academy of Movement Ltd exhibits several warning signs, particularly around liquidity and working capital management. The company shows persistent negative net current assets (working capital deficit) and has a shrinking asset base. While it remains solvent with positive net assets and shareholders’ funds, these indicators suggest financial strain and operational challenges. The financial "pulse" is weak, indicating a need for immediate attention to avoid deeper distress.

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2. Key Vital Signs

Metric	2023 Value	2022 Value	Interpretation
Cash at Bank	£6,683	£5,469	Low but slightly improved cash reserves; tight liquidity.
Current Liabilities	£20,328	£8,756	Sharp increase; more short-term debts due, creating pressure.
Net Current Assets (Working Capital)	-£13,645	-£3,287	Negative and worsening; signals inability to cover short-term obligations comfortably.
Net Assets (Equity)	£5	£6,135	Drastic drop; near zero equity, risky financial position.
Fixed Assets (Net Book Value)	£10,167	£15,722	Declining fixed asset base; possible asset disposals or high depreciation.
Long-term Liabilities	£3,483	-£6,300	Shift from a creditor position to a liability; possible loans or finance leases increasing.
Share Capital	£2	£2	Minimal capital invested by shareholders; limited buffer.
Employees	2	2	Small workforce; micro/small enterprise scale.

Interpretation of Vital Signs:

• The "blood pressure" of the business—its liquidity—is low and worsening due to a sharp increase in current liabilities outpacing current assets. Negative working capital is a key symptom of financial distress.
• The "immune system," reflected by shareholders’ funds, is almost depleted, leaving little room for absorbing losses or shocks.
• The "muscle mass" (fixed assets) is declining, which may indicate selling off assets or high usage/depreciation without reinvestment.
• The company’s cash position is modest but insufficient to cover the increasing short-term debts.

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3. Diagnosis

Academy of Movement Ltd is currently in a fragile financial state, showing clear symptoms of liquidity stress and eroding equity. The company’s working capital deficit indicates it is struggling to meet short-term liabilities with available current assets, a sign often associated with cash flow problems and operational inefficiencies.

The significant rise in current liabilities in 2023 (more than doubling) coupled with a drop in net assets to almost zero suggests worsening financial health over the past year. Despite maintaining some cash reserves, the company’s rapid increase in short-term debts and declining asset base signals a risk of insolvency if corrective actions are not taken.

The limited share capital and small workforce point to a micro/small enterprise operating on tight margins, which may be vulnerable to external shocks or internal cash flow mismatches.

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4. Recommendations

Immediate Actions (Stabilizing Vital Signs):

• Improve Cash Flow Management: Tighten credit control, accelerate debtor collections, and negotiate better payment terms with suppliers to ease pressure on working capital.
• Reduce Current Liabilities: Explore restructuring or refinancing short-term debts to reduce immediate cash outflows or extend deadlines.
• Asset Review: Evaluate the fixed assets for potential sales or more efficient use to generate cash without harming operations.

Medium-Term Strategy (Strengthening the Immune System):

• Increase Equity Buffer: Consider capital injection from shareholders or external investors to rebuild shareholders’ funds and provide a financial cushion.
• Cost Control: Review operating expenses to improve profitability and reduce cash burn, focusing on scalable growth.
• Financial Planning: Implement robust budgeting and forecasting to anticipate liquidity needs and avoid surprises.

Long-Term Outlook (Prognosis):
If these recommendations are followed, the company can improve its liquidity and equity base, stabilizing the financial condition and enabling sustainable growth in the performing arts and sports education sectors. Failure to act may lead to escalating liquidity problems, potential insolvency, or forced restructuring.

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