ANDREW HUDSON STUDIO LTD

Executive Summary

Andrew Hudson Studio Ltd exhibits a strong initial financial position with healthy liquidity and positive net assets typical for a new creative business. The company is solvent and free of debt, but should carefully manage its tax liabilities and director financing to maintain robust cash flow. With prudent financial management, the outlook is stable and promising for future growth.

ANDREW HUDSON STUDIO LTD - Analysis Report

Company Number: 14684719

Analysis Date: 2025-07-29 14:56 UTC

Financial Health Assessment of Andrew Hudson Studio Ltd as at 31 March 2024

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1. Financial Health Score: B+

Explanation:
Andrew Hudson Studio Ltd is a newly incorporated small private limited company operating in artistic creation and specialised design. The company shows strong liquidity and solid net asset backing for a first-year entity. The absence of long-term debt and positive net current assets reflect a stable financial position. However, some caution is advised given the company's very recent establishment, limited operating history, and the presence of tax liabilities. Overall, the company appears financially healthy but early-stage.

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2. Key Vital Signs

Metric	Value (£)	Interpretation
Fixed Assets	3,684	Tangible assets mainly computer equipment; modest investment typical for a small creative studio
Current Assets	115,025	Strong current assets, almost all cash (114,838), indicating healthy liquidity
Current Liabilities	56,587	Includes corporation tax (29,703), VAT (3,445), and director's current account (23,440)
Net Current Assets (Working Capital)	58,438	Positive working capital shows ability to cover short-term obligations comfortably
Net Assets	61,278	Equity capital, including retained earnings; positive net worth indicates solvency
Shareholders Funds	61,279	Entirely equity-financed, no long-term debt
Provisions for Liabilities	844	Deferred tax provision, a non-cash liability, typical and manageable
Number of Employees	1	Sole director and employee, typical for micro entity

Interpretation:
The company's "vital signs" show a "healthy cash flow" scenario with large cash reserves relative to liabilities, indicating no immediate liquidity distress. The presence of corporation tax and director's current account liabilities suggests active business operations generating taxable profits and some director financing.

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3. Diagnosis: Financial Condition

• Liquidity & Solvency: Andrew Hudson Studio Ltd maintains a strong liquidity position with cash reserves almost double its current liabilities, a good sign of a "healthy pulse." The positive net current assets and net assets indicate the company is solvent and well-capitalised for its scale.

• Capital Structure: The company is entirely equity-financed with no borrowings, reducing financial risk but implying reliance on shareholder funding and operational cash flow for growth.

• Profitability: While detailed profit and loss figures are not disclosed (small companies exemption), the retained earnings in equity imply the company has generated some profit or capital injection. The corporation tax liability further supports this.

• Operations: As a micro-sized entity with only one employee (director), the business operates leanly. The investment in computer equipment supports its artistic and design services.

• Risks & Symptoms: The main "symptom of caution" is the significant corporation tax liability which needs to be managed to avoid cash flow strain. Also, the director's current account balance suggests funds owed to the director which could affect liquidity if called in.

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4. Recommendations

• Manage Tax Obligations: Prioritise timely payment of corporation tax and VAT liabilities to avoid penalties and interest—akin to managing a chronic condition early to prevent complications.

• Maintain Cash Reserves: Continue monitoring cash flows carefully, ensuring the company retains sufficient liquidity to cover operational expenses and tax bills, preserving the “healthy circulation” of funds.

• Plan for Growth: Consider gradually investing in marketing and client acquisition to build turnover and diversify revenue streams to strengthen profitability and reduce reliance on director funding.

• Monitor Director’s Current Account: Clarify arrangements for the director’s current account to ensure it doesn't negatively impact working capital. Formalising this can reduce financial stress.

• Regular Financial Reviews: As the business evolves beyond its startup phase, implement more frequent financial health checks to spot emerging risks early, much like regular health screenings.

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