Company Number: SC672207

Analysis Date: 2025-07-19 12:27 UTC

Financial Health Assessment for AKA CONSULTANTS LTD

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1. Financial Health Score: C

Explanation:
AKA CONSULTANTS LTD demonstrates modest financial stability but with emerging signs of strain. The company maintains positive net current assets and shareholders’ funds, indicating it is solvent and capable of meeting short-term obligations. However, a significant reduction in cash reserves and a decline in net assets over recent years highlight “symptoms of distress” in liquidity management and profitability. These factors place the company in a cautious middle ground—stable but requiring close monitoring and remedial action to restore financial wellness.

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2. Key Vital Signs

Metric	2024 (£)	2023 (£)	Interpretation
Current Assets	6,319	4,479	Slight increase, indicating working capital base maintained.
Cash at Bank	2,419	4,479	Sharp decrease in cash — a warning sign of reduced liquidity.
Debtors	3,900	0	Increase in receivables; potential cash flow timing risk.
Current Liabilities	5,559	3,310	Substantial rise, increasing short-term financial pressure.
Net Current Assets	760	1,169	Positive but shrinking buffer to cover liabilities.
Net Assets	760	1,263	Declining equity signals erosion of retained earnings.
Shareholders’ Funds	760	1,263	Mirrors net assets, confirming equity decline.

Additional Observations:

• Tangible fixed assets have been fully depreciated, indicating minimal investment in long-term assets.
• Dividends paid in 2024 (£4,450) exceed the net income implied by equity changes, possibly contributing to reduced reserves.
• Related party balances show director loans, which require careful management to avoid liquidity strain.

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3. Diagnosis

AKA CONSULTANTS LTD’s financial “vital signs” reveal a company currently in a state of financial “bruising” rather than acute illness. The positive net current assets and shareholders’ funds indicate solvency and a working capital “pulse” that is still alive. However, the sharp reduction in cash reserves coupled with increasing current liabilities signals liquidity tightness akin to a patient with a slowing heartbeat—still functioning but at risk if conditions worsen.

The rise in trade debtors suggests the company is extending credit or experiencing delays in collection, which can impair cash flow—the “circulatory system” of business health. Additionally, dividend payments that outpace retained earnings may be draining the company’s reserves, analogous to a patient expending more energy than intake.

Overall, the company is not in immediate danger but exhibits “symptoms” that, if left untreated, could escalate to financial distress, including difficulties in meeting short-term obligations and diminished ability to invest in growth.

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4. Recommendations

To restore and maintain financial wellness, AKA CONSULTANTS LTD should consider the following actions:

a) Enhance Cash Flow Management

• Accelerate debtor collections: Implement stricter credit controls or offer early payment incentives.
• Monitor and control dividend payments: Ensure dividends do not exceed sustainable retained earnings to preserve capital.

b) Manage Current Liabilities

• Negotiate extended payment terms: Work with suppliers and creditors to ease short-term payment pressures.
• Regular cash flow forecasting: Establish rolling forecasts to anticipate liquidity needs proactively.

c) Strengthen Financial Reserves

• Retain earnings: Reduce dividend payouts temporarily to rebuild reserves.
• Consider capital injection: If feasible, raise additional equity or director loans under clear terms to bolster finances.

d) Strategic Planning

• Review business model and revenue streams: Ensure turnover growth to rebuild profitability and net assets.
• Limit unnecessary expenditures: Especially capital investments given fully depreciated fixed assets unless critical.

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Executive Summary