ALACATI LTD

Executive Summary

ALACATI LTD demonstrates stable financial health with positive working capital and net assets, reflecting a generally sound liquidity position and prudent management for a small private company. However, recent reductions in cash reserves and equity signal the need for vigilant cash flow management and cost control to sustain financial wellness. Implementing targeted measures can bolster resilience and support future growth.

ALACATI LTD - Analysis Report

Company Number: 12676261

Analysis Date: 2025-07-29 20:51 UTC

Financial Health Assessment Report for ALACATI LTD (as of 30 June 2025)

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1. Financial Health Score: B

Explanation:
ALACATI LTD demonstrates generally stable financial health with positive net current assets and net assets over recent years, indicating a sound liquidity position and reasonable capital base. However, a slight decline in cash reserves and net assets in the latest year signals some caution. The company operates within the small business exemption regime, with modest asset and liability levels. The financial "vital signs" reveal mostly healthy operations but with symptoms of tightening working capital that merit attention.

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2. Key Vital Signs

Metric	2025 (£)	2024 (£)	Interpretation
Current Assets	7,959	9,987	Slight decline, chiefly cash reduction; still sufficient to cover short-term obligations.
Cash at Bank and in Hand	7,889	9,922	Healthy cash position but declining; could indicate tighter cash flow.
Debtors (Receivables)	70	65	Stable and very low, indicating efficient collection or low credit risk.
Current Liabilities	6,852	8,420	Decreased, easing pressure on working capital.
Net Current Assets (Working Capital)	1,107	1,567	Positive but reduced, important buffer for day-to-day operations shrinking.
Net Assets (Equity)	1,110	1,638	Positive but decreased, indicating slight erosion of shareholder value.
Share Capital	100	100	Minimal, typical for small private companies; equity increase mainly from retained earnings.
Number of Employees	1	1	Very small scale, indicating a micro business size.

Interpretation:

• The company maintains positive working capital and net assets, critical indicators of financial stability.
• The slight reduction in cash and net assets suggests the company may have experienced tighter cash flow or increased expenses in the last financial year.
• Low debtor balances and steady liabilities imply effective credit and liability management.
• Fixed tangible assets are minimal and depreciating, consistent with a service-oriented business with little capital expenditure.

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3. Diagnosis

ALACATI LTD exhibits the financial "pulse" of a small but operational business with adequate liquidity to meet its short-term obligations ("healthy cash flow" signs). The company has maintained positive net assets and working capital throughout its five years of operation, demonstrating resilience and prudent financial management.

However, the recent decline in cash reserves and net assets — while not immediately alarming — are "symptoms of distress" that merit close monitoring. These could reflect increased operational costs, reduced turnover, or timing differences in cash receipts versus payments. The small scale of operations and limited fixed assets suggest the company relies heavily on cash flow management to sustain operations.

The sole director and controlling shareholder structure implies concentrated decision-making but also potential risks if business conditions deteriorate, as there may be limited external financial support.

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4. Recommendations

To improve and sustain financial wellness, ALACATI LTD should consider the following actions, akin to a patient following a treatment plan to strengthen health:

• Enhance Cash Flow Monitoring: Implement more granular cash flow forecasting to anticipate and manage cash outflows effectively, preventing "cash flow strain."
• Cost Control Measures: Review operational expenses to identify areas for cost optimization without compromising service quality.
• Strengthen Working Capital: Explore opportunities to optimize payment terms with suppliers and clients to increase net current assets buffer.
• Build Reserves: Aim to rebuild cash reserves gradually to cushion against future uncertainties or unexpected expenses.
• Financial Reporting: Continue timely and accurate filings to maintain regulatory compliance and investor confidence.
• Growth Opportunities: Consider strategic initiatives to increase revenue streams, which will help improve profitability and net asset growth.
• Risk Management: Due to sole control, consider contingency planning for management succession or business continuity to mitigate concentration risks.

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