ALUKO CONSULTING LTD

Executive Summary

ALUKO CONSULTING LTD has demonstrated initial signs of financial recovery with working capital turning positive and net assets shifting from negative to slightly positive. However, the business remains fragile with tight liquidity and high debtor concentration posing risks. Focused actions on improving cash flow, managing liabilities, and building reserves are essential to secure sustainable financial health.

ALUKO CONSULTING LTD - Analysis Report

Company Number: 14631947

Analysis Date: 2025-07-20 15:31 UTC

Financial Health Assessment for ALUKO CONSULTING LTD

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1. Financial Health Score: C

Explanation:
ALUKO CONSULTING LTD shows clear signs of early-stage financial recovery but remains fragile. The company has transitioned from a state of negative net assets in its first two years to a marginally positive net asset position by its third year. The score "C" reflects a business that is stabilizing but still at risk, requiring close management attention to build a more robust financial foundation.

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2. Key Vital Signs

Metric	2025 Value	Interpretation
Current Assets	£11,295	Increased sharply, indicating improved liquidity.
Cash at Bank	£2,186	Modest cash balance; some cushion but limited.
Debtors	£9,109	Significant receivables; potential cash flow risk if not collected timely.
Current Liabilities	£11,195	Creditors nearly equal to current assets; tight working capital.
Net Current Assets	£100	Barely positive working capital; "healthy cash flow" is fragile.
Net Assets (Shareholders’ Funds)	£100	Marginally positive equity after losses in prior years.
Profit & Loss Reserve	Negative prior years, improving but still negative.

Interpretation of Vital Signs:

• The company’s liquidity ("blood flow") is showing signs of improvement, moving from a deficit to just positive net current assets.
• A large portion of current assets is tied up in debtors, which is akin to "oxygen supply" delayed in reaching the tissues—if collection slows, the business could experience distress.
• The company's net asset base is almost at break-even, showing recovery from earlier accumulated losses but no significant financial cushion yet.

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3. Diagnosis

ALUKO CONSULTING LTD is in the "recovery phase" of its financial health. Initial years showed "symptoms of distress" — notably negative net assets and working capital deficits that could have impeded operational flexibility. The latest financial year shows a shift toward stability, with current assets now exceeding liabilities by a small margin and net assets turning positive.

This suggests management has begun to address prior imbalances possibly through increased sales (debtor growth) and controlled liabilities. However, the close parity between current assets and liabilities means the company is still vulnerable to cash flow interruptions or delays in debtor payments.

The firm's reliance on a single director and sole shareholder with controlling interest consolidates decision-making but could pose risks if diversification in management or capital is needed.

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4. Recommendations

• Improve Cash Conversion Cycle: Accelerate collection of debtors to ensure cash inflow is timely. Consider stricter credit terms or incentives for early payment to reduce receivables risk.
• Build Cash Reserves: Aim to increase cash holdings to cover at least 3 months of operating expenses to buffer unexpected outflows and smooth operational "heartbeat."
• Monitor and Manage Liabilities: Negotiate longer payment terms with creditors to enhance working capital without compromising supplier relationships.
• Financial Forecasting: Develop rolling cash flow forecasts to anticipate liquidity needs and avoid "financial arrhythmias."
• Seek External Funding Prudently: If growth requires investment, consider equity or low-cost financing options to strengthen the balance sheet without over-leveraging.
• Strengthen Governance: Although the company is currently single-director controlled, consider advisory support or additional expertise to enhance strategic oversight.
• Regular Financial Health Checks: Continue diagnostic reviews to catch early warning signs and adjust strategies proactively.

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