APT LOCUM LTD

Executive Summary

APT LOCUM LTD shows a solid financial foundation with positive net assets and strong cash reserves, indicative of good liquidity and solvency. However, the decline in equity and working capital, coupled with rising current liabilities, points to emerging pressures that require careful financial management. With focused attention on receivables and liabilities, the company is well-positioned to sustain healthy growth and operational stability.

APT LOCUM LTD - Analysis Report

Company Number: 12806662

Analysis Date: 2025-07-20 18:17 UTC

Financial Health Assessment of APT LOCUM LTD (as at 31 August 2024)

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1. Financial Health Score: B

APT LOCUM LTD demonstrates a generally sound financial position with a solid equity base and positive net current assets, reflecting a "healthy pulse" in its balance sheet. However, some "symptoms" such as a reduction in net assets and a notable decrease in trade debtors signal caution. The company’s financial health is good but not without mild strains that require monitoring.

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2. Key Vital Signs

• Net Assets (Equity): £80,004 (down from £95,279 in prior year)
  Interpretation: Positive equity indicates the company is solvent, with more assets than liabilities. The decrease (about 16%) suggests some erosion of retained earnings or profits.

• Net Current Assets (Working Capital): £67,915 (down from £85,491)
  Interpretation: A comfortable buffer of current assets over current liabilities signals liquidity health, akin to a strong heartbeat. The decrease signals some tightening in short-term liquidity but remains positive.

• Cash at Bank: £129,592 (up from £96,808)
  Interpretation: Robust cash reserves provide a "healthy blood flow" for daily operations; cash increase is a positive sign.

• Trade Debtors: £6,347 (down sharply from £40,368)
  Interpretation: Substantial reduction in receivables could indicate improved collection or reduced sales on credit. While lower debtors reduce liquidity risk, the sharp fall may hint at declining sales or altered credit policy.

• Current Liabilities: £86,279 (up from £57,185)
  Interpretation: Increase in short-term debts may be a "symptom of rising operational obligations or delayed payments," requiring attention to avoid liquidity strain.

• Tangible Fixed Assets: £16,021 (up from £13,051)
  Interpretation: Investment in assets suggests reinvestment in business infrastructure, a positive sign of growth intentions.

• Director Loans: Net amount owed by company to directors is £423, reduced from £32,514 receivable prior year
  Interpretation: Settlement of director loans improves the company's cash position and balance sheet clarity.

• Employee Count: Increased from 6 to 8
  Interpretation: Growth in headcount may indicate business expansion but also higher fixed costs.

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3. Diagnosis: Financial Condition Summary

APT LOCUM LTD is exhibiting generally stable financial health with a solid equity base and strong cash reserves, a "healthy cardiovascular system" for operations. The positive net current assets confirm the company can cover its short-term liabilities comfortably.

However, there are some mild warning signs:

• The fall in net assets and net current assets signals some weakening in reserves or profitability.
• The sharp reduction in trade debtors could reflect either improved collections or a drop in credit sales, which may impact revenue.
• Increasing current liabilities could increase short-term pressure on cash flow if not managed carefully.
• The company is investing in tangible assets and expanding staff, suggesting growth but also increased financial commitments.

Overall, the company remains solvent and liquid, with no immediate distress symptoms, but the downward trend in equity and working capital suggests the need for careful cash flow and receivables management to maintain robustness.

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4. Recommendations for Financial Wellness

• Enhance Receivables Management: Investigate the substantial drop in trade debtors to ensure it is due to improved collections rather than declining sales. Strengthen credit policies and customer payment terms to maintain steady cash inflows.

• Monitor and Control Current Liabilities: Since short-term liabilities have increased, implement diligent cash flow forecasting and negotiate payment terms with suppliers to avoid liquidity crunches.

• Profitability Analysis: Review profit margins and expense controls to address the erosion in retained earnings, ensuring operational efficiency as staff and asset base grow.

• Maintain Strong Cash Reserves: Continue to build cash reserves as a buffer against unforeseen expenses or downturns, keeping the company’s "circulatory system" robust.

• Strategic Asset Investment: Ensure capital expenditures on tangible assets align with business growth projections and generate adequate returns.

• Director Loans Transparency: Regularly reconcile director loan accounts to avoid balance sheet misstatements and maintain clear financial governance.

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