Company Number: 13614843

Analysis Date: 2025-07-20 13:22 UTC

Financial Health Assessment: ALVIKA LTD (As of 30 September 2024)

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1. Financial Health Score: B

Explanation:
ALVIKA LTD demonstrates a generally sound financial position with steady profitability, positive net assets, and growing shareholder funds over recent years. While the company’s liquidity has weakened slightly in the latest year, overall it maintains a healthy balance sheet and operational performance. The score "B" reflects a stable and growing business with minor liquidity concerns that require monitoring.

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2. Key Vital Signs

Metric	2024 Value (£)	Interpretation
Turnover	59,737	Modest revenue for a micro-sized business, showing growth from £50,867 in 2022.
Gross Profit	19,736	Gross margin approx. 33% - indicates reasonable cost control.
Operating Profit	4,482	Operating margin about 7.5%, profitable but with some pressure from rising costs.
Profit for Year	3,631	Positive net profit, slightly down from previous year’s £4,006 but still healthy.
Fixed Assets	16,999	Significant investment in tangible fixed assets (motor vehicles), up from £7,626.
Current Assets	4,316	Decreased from £7,512, mainly due to lower cash reserves.
Current Liabilities	7,350	Increased from £4,804, causing net current assets to turn negative (-£3,034).
Net Current Assets (Working Capital)	-3,034	Negative working capital indicates potential liquidity “symptom of distress.”
Net Assets (Shareholders’ Funds)	13,965	Positive and growing equity base, indicating long-term solvency.

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3. Diagnosis: Financial Health Overview

The company’s financial “vital signs” show a picture akin to a patient with good baseline health but with a recent episode of liquidity stress.

• Profitability: ALVIKA is generating profits consistently, with operating and net profit margins positive and stable. This is a good sign of underlying business strength and operational efficiency.

• Liquidity: The sudden shift from positive to negative net current assets (working capital) is a concern. It means current liabilities now exceed current assets by £3,034, suggesting the company may face short-term cash flow pressures. The reduction in cash reserves from £7,512 to £3,229 exacerbates this symptom.

• Asset Management: The increase in tangible fixed assets (motor vehicles) nearly doubled, which could explain part of the cash outflow impacting liquidity. This suggests recent investment in operational capacity, which, while potentially beneficial long-term, has temporarily strained cash resources.

• Solvency: The company maintains a healthy net asset position, with shareholders’ funds increasing from £10,334 to £13,965, indicating the business is financially solvent and has a solid equity buffer.

• Cost Control: Gross margin remains steady, but selling & distribution costs have nearly doubled, which may require investigation to ensure they are driving proportional revenue increases.

• No audit required: Being exempt from audit reflects the micro or small size of the company but also means less external scrutiny, so internal controls should be robust.

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4. Recommendations: Action Plan to Improve Financial Wellness

1. Improve Liquidity Management:

   • Conduct a detailed cash flow forecast to identify timing gaps.
   • Negotiate longer payment terms with suppliers to ease short-term liabilities.
   • Accelerate collection of debts (debtors) and consider invoice financing if necessary.
   • Monitor VAT and corporation tax payments closely, as these are part of current liabilities.

2. Review Capital Expenditure:

   • Assess the return on investment for the motor vehicles purchased.
   • Delay or phase future capital expenditures until cash flow stabilizes.

3. Control Overhead and Distribution Costs:

   • Investigate the significant increase in selling and distribution costs.
   • Identify cost-saving opportunities or efficiency improvements in sales and logistics.

4. Strengthen Working Capital:

   • Explore options for short-term financing or overdrafts to cover the current negative working capital.
   • Maintain a minimum cash buffer to prevent liquidity crises.

5. Ongoing Financial Monitoring:

   • Establish monthly financial reviews focusing on liquidity ratios and cash flow.
   • Implement early warning indicators for any deterioration in working capital.

6. Strategic Growth Planning:

   • Consider strategies to increase turnover sustainably to improve margins and cash generation.
   • Use profits to rebuild cash reserves gradually.

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Medical Analogy Summary:
ALVIKA LTD is like a patient with a robust constitution (profitability and net assets) but currently experiencing a bout of dehydration (liquidity squeeze). With careful fluid (cash) management and rest (cost control), the company is expected to regain full strength and continue its growth trajectory.

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