Company Number: 14384249

Analysis Date: 2025-07-20 14:28 UTC

Financial Health Assessment Report for ALAM PHARMA LTD

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1. Financial Health Score: C

Explanation:
ALAM PHARMA LTD’s financial profile shows some signs of stability but also notable concerns. The company maintains positive net current assets and net assets, indicating solvency, but the significant increase in current liabilities in the latest financial year compared to the prior year suggests emerging liquidity stress. The decline in net assets by over 50% year-on-year warrants caution. Hence, a “C” grade reflects moderate health with symptoms that require close monitoring and corrective action.

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2. Key Vital Signs

Vital Sign	2024 Value (£)	2023 Value (£)	Interpretation
Current Assets	24,274	19,994	Healthy growth in short-term assets, mainly cash or receivables—positive sign for liquidity.
Current Liabilities	16,332	3,780	Sharp increase in short-term obligations, a symptom of growing financial pressure.
Net Current Assets	7,942	16,214	Working capital has halved, indicating reduced short-term financial cushion; watch closely.
Net Assets (Equity)	7,942	16,214	Equity has decreased significantly, signaling diminished financial resilience or possible losses.
Employee Count	2	2	Stable staffing levels consistent with micro-entity size.
Company Age	2 years	1 year	Still in early growth phase, often associated with volatile financial performance.

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3. Diagnosis: What the Financial Data Reveals About Business Health

ALAM PHARMA LTD is a young micro-entity operating as a dispensing chemist in specialized stores. The company’s financial "vital signs" indicate a baseline health status but with emerging symptoms of liquidity stress:

• Healthy cash inflows: Current assets have increased, suggesting cash or receivables are being managed well.
• Rising short-term debt: Current liabilities have surged by over four times, which is a notable symptom of financial strain—potentially due to supplier credit or accrued expenses that need quicker settlement.
• Reduced working capital: The net current assets have dropped substantially, reflecting less buffer for day-to-day operations—a critical symptom of distress that could affect operational flexibility.
• Equity decline: The drop in net assets (shareholders’ funds) may indicate losses absorbed or increased liabilities, weakening the capital base.
• No audit required: Filing under micro-entity provisions limits detailed financial transparency but also reduces compliance burden.

Overall, the company is solvent but shows early warning signs that cash flow management and liability control need urgent attention to avoid progression to financial distress.

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4. Recommendations: Specific Actions to Improve Financial Wellness

• Tighten working capital management: Implement stronger controls on payables and receivables to prevent further escalation of short-term liabilities.
• Cash flow forecasting: Develop rolling cash flow forecasts to anticipate liquidity crunches and plan financing needs proactively.
• Expense review: Conduct a detailed review of operating expenses and creditor terms to identify and reduce unnecessary outflows.
• Equity strengthening: Consider options for capital injection or retained earnings enhancement to rebuild the equity buffer.
• Engage professional advice: Seek expert financial management support to optimize financial structure and improve reporting transparency.
• Monitor financial KPIs regularly: Track current ratio, quick ratio, and net assets closely to detect negative trends early.
• Plan for growth cautiously: As a young company, balance growth ambitions with financial capacity to avoid overextension.

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