ACTIVE CARE AND DEVELOPMENT LTD

Executive Summary

ACTIVE CARE AND DEVELOPMENT LTD faces liquidity challenges and a significant decline in net assets, signaling financial strain that requires urgent attention to avoid insolvency. The company must act swiftly to improve cash flow, manage costs, and consider capital injection to restore financial stability and ensure sustainable operations.

ACTIVE CARE AND DEVELOPMENT LTD - Analysis Report

Company Number: 14031139

Analysis Date: 2025-07-29 19:01 UTC

Financial Health Assessment for ACTIVE CARE AND DEVELOPMENT LTD

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1. Financial Health Score: C

Explanation:
The company shows signs of financial strain with deteriorating working capital and a significant reduction in net assets compared to the previous year. While not in immediate distress, the negative net current assets ("symptom of liquidity stress") and shrinking equity base indicate vulnerability that must be addressed to avoid further weakening. The score C reflects a "concerning but manageable" state, requiring proactive measures.

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2. Key Vital Signs

Metric	2024 Value (£)	Interpretation
Fixed Assets	4,364	Small but stable long-term asset base
Current Assets	519	Very low short-term liquid assets, decreased sharply
Current Liabilities	4,575	High short-term obligations
Net Current Assets	-4,056	Negative working capital, indicating liquidity risk
Total Assets Less Current Liabilities	308	Barely positive, borderline solvency
Net Assets (Equity)	308	Very low equity, down from £1,531 last year
Employees (average)	1	Small staffing, consistent

Interpretation of Vital Signs:

• Negative Net Current Assets: This is a critical "symptom of distress." The company’s current liabilities exceed current assets by over £4,000, implying it may struggle to meet short-term debts without additional cash inflow or financing.
• Declining Net Assets: Equity has dropped by approximately 80% in one year, signaling accumulated losses or withdrawals eroding the company’s financial buffer.
• Fixed Assets Growth: Slight increase in fixed assets suggests some investment but remains minimal and unlikely to offset liquidity issues.
• Micro Entity Profile: As a micro entity with a single employee, the company may have limited operational scale but also limited overhead.

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3. Diagnosis

The financial health of ACTIVE CARE AND DEVELOPMENT LTD resembles a patient showing early signs of cardiovascular strain — the heart (cash flow and liquidity) is under pressure, and the body's (business's) reserves (equity) are dwindling. The company’s negative working capital is a "red flag" indicating it may face challenges in funding day-to-day operations without external support or improved cash inflows.

The sharp decline in net assets suggests the company might be incurring losses or distributing funds beyond its means. While it is not insolvent yet (positive total assets less current liabilities), the margin is very thin, and the risk of crossing into negative net worth is elevated.

The company is at a critical juncture: without intervention, it risks developing chronic financial illness leading to insolvency.

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4. Recommendations

Immediate Actions:

• Improve Liquidity:

  • Tighten debtor collections and review payment terms to reduce outstanding receivables.
  • Negotiate extended payment terms with suppliers to ease short-term cash outflows.
  • Consider short-term financing options (overdraft, invoice financing) to cover immediate cash shortfalls.

• Cost Management:

  • Review and reduce discretionary expenses.
  • Evaluate employee productivity and operational efficiency given the small team size.

• Capital Injection:

  • The sole shareholder, who controls 75-100% of the company, may consider injecting additional funds to restore equity and working capital.

Medium to Long-Term Actions:

• Profitability Improvement:

  • Reassess pricing, client mix, and service delivery to increase revenues and margins.
  • Diversify income streams within the educational support sector to stabilize cash flow.

• Regular Financial Monitoring:

  • Implement monthly cash flow forecasting to anticipate liquidity issues early and adjust operations accordingly.
  • Maintain up-to-date management accounts beyond statutory filings for timely decision-making.

• Governance and Planning:

  • Develop a formal business plan including financial projections and risk assessments to guide recovery efforts.

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