ALFASAPP IT LTD

Executive Summary

ALFASAPP IT LTD currently maintains a stable financial position with positive net assets and healthy cash reserves, but it faces early symptoms of financial strain evidenced by rising current liabilities and declining equity. Immediate focus on cash flow management, cost control, and revenue enhancement is essential to improve its financial vitality and ensure sustainable growth.

ALFASAPP IT LTD - Analysis Report

Company Number: 12931965

Analysis Date: 2025-07-20 14:08 UTC

Financial Health Assessment of ALFASAPP IT LTD

---

1. Financial Health Score: C

Explanation:
ALFASAPP IT LTD shows mixed signals in its financial health. While it maintains positive net assets and net current assets, indicating a baseline of financial stability, there is a notable reduction in net assets and net current assets from the previous year. Cash position has improved, which is a positive sign of liquidity, but overall working capital and shareholders’ funds have declined. The drop in net assets and current liabilities spike suggests emerging financial stress symptoms that require attention. Hence, a mid-tier grade of C reflects a company that is currently stable but presents early signs of financial strain.

---

2. Key Vital Signs

• Net Assets: £8,143 (down from £15,151 last year)
  Interpretation: Net assets represent the company’s “equity capital” or the cushion available after settling liabilities. The decline signals erosion of equity, a symptom of underlying profit pressures or increased liabilities.

• Net Current Assets (Working Capital): £7,143 (down from £14,151)
  Interpretation: Positive working capital means the company can cover short-term obligations, but the halving of this figure indicates tightening liquidity, a warning sign of potential cash flow pressure.

• Cash at Bank: £36,992 (up from £11,287)
  Interpretation: Healthy cash flow is evident here, as cash reserves have increased substantially, improving the company’s ability to meet immediate expenses and operational costs.

• Current Liabilities: £41,941 (up from £9,055)
  Interpretation: A significant rise in current liabilities indicates increased short-term debts or payables, which can strain cash flow if not managed properly.

• Turnover: No recent turnover data for 2023, but £1.25 million reported in 2022 with a previous figure of £1.79 million in 2020.
  Interpretation: A declining revenue trend is an underlying symptom of business challenges or market shifts.

• Average Employees: 2 in 2023, 0 in 2022
  Interpretation: Small team size consistent with a micro/small enterprise but an increase in employees suggests some business scaling or operational changes.

---

3. Diagnosis

ALFASAPP IT LTD’s financial “vital signs” reveal a business currently experiencing some stress but not in critical condition. The company maintains positive net assets and working capital, which is reassuring and indicates it can still meet obligations. However, the halving of net current assets and the sharp increase in current liabilities raise red flags about potential liquidity strain. The increase in cash reserves is a positive counterbalance, suggesting management has been able to boost liquid resources, possibly by managing receivables or delaying payables.

The decline in turnover over recent years points to a symptom of reduced market demand or competitive pressure, which could be the root cause of the shrinking equity base. The company is in a cautious phase where it must carefully manage expenses, receivables, and liabilities to avoid slipping into financial distress.

The presence of only two employees reflects a lean operation, consistent with a small IT consultancy or software business, but the company must ensure that growth or operational scaling does not outpace its financial capacity.

---

4. Recommendations

• Enhance Cash Flow Monitoring:
  Continue to maintain or improve the strong cash position. Regular cash flow forecasting will help anticipate liquidity crunches before they develop.

• Manage Current Liabilities:
  Review and negotiate payment terms with suppliers and creditors to avoid sudden spikes in short-term liabilities. Delaying non-essential payments without harming relationships can provide breathing room.

• Increase Revenue Generation:
  Investigate the causes of turnover decline and develop strategies to regain or grow sales, such as diversifying client base, upselling services, or exploring new markets aligned with the company’s IT consultancy and software development expertise.

• Cost Control:
  Tighten control on operating expenses to prevent further erosion of net assets. A lean cost structure is critical for business health, especially in a potentially volatile industry.

• Regular Financial Health Check-ups:
  Adopt periodic financial reviews similar to medical check-ups to catch early symptoms of financial distress, allowing timely interventions.

• Governance and Succession Planning:
  Given recent director changes and control shifts, ensure clear governance and succession plans are in place to maintain strategic continuity and investor confidence.

---