ARCADIA PRODUCTIONS LTD

Executive Summary

ARCADIA PRODUCTIONS LTD exhibits typical financial symptoms of a start-up with fragile liquidity and minimal equity. Immediate steps to manage working capital, suspend dividends, and strengthen capital are essential to avoid cash flow crises. With strategic financial management, the company can improve its outlook and build a healthier financial foundation.

ARCADIA PRODUCTIONS LTD - Analysis Report

Company Number: 15396156

Analysis Date: 2025-07-29 12:50 UTC

Financial Health Assessment: ARCADIA PRODUCTIONS LTD

---

1. Financial Health Score: D

Explanation:
The financial snapshot of ARCADIA PRODUCTIONS LTD reveals early-stage operational challenges typical of a start-up company in the creative production sector. The company has minimal net assets (£1) and a negative working capital position, indicating liquidity stress ("symptoms of distress"). While the company is very new (incorporated in January 2024) and still building its financial base, the current financials show a fragile position requiring close monitoring and strategic interventions.

---

2. Key Vital Signs

Metric	Value (£)	Interpretation
Fixed Assets	4,780	Modest investment in tangible assets (computer equipment).
Current Assets	7,512	Includes cash (£6,525) – healthy liquidity buffer in cash.
Current Liabilities	12,291	Short-term debts exceed current assets, causing net current liabilities of -4,779. A red flag for liquidity.
Net Current Assets (Working Capital)	-4,779	Negative working capital; potential difficulty in meeting short-term obligations.
Net Assets	1	Minimal shareholder equity; very thin capital base.
Shareholders’ Funds	1	Capital investment is nominal.
Debtors	987	Small receivables, possibly director loans.
Taxation and Social Security Liabilities	10,419	Significant tax liabilities indicating operating losses or deferred tax payments.
Dividends Paid to Director	48,562	Large dividends despite fragile balance sheet; may stress cash flow.
Director Loans	987	Director has extended interest-free loans, supporting liquidity.

Additional Observations:

• The company is in the Television and Video Production sector (SIC 59113 and 59112), a capital-light but cash-flow-sensitive business.
• Only one employee/director (Alistair Wilson), implying a lean operation.
• Accounts are unaudited but comply with small company exemption rules.
• The director is the sole controlling party, which concentrates decision-making but also risk.

---

3. Diagnosis

The company exhibits several "symptoms" that suggest financial vulnerability:

• Liquidity Stress: Negative net current assets (-£4,779) mean short-term liabilities exceed short-term assets, potentially causing cash flow difficulties in meeting immediate obligations.
• Thin Capital Base: Net assets and shareholders’ funds stand at just £1, indicating the company is in its infancy without accumulated profits or reserves.
• Significant Tax Liabilities: £10,419 owed in taxation and social security could be a burden if cash inflows are not consistent.
• High Dividends Relative to Equity: Paying out £48,562 dividends despite negligible equity and negative working capital is a concern, potentially draining cash that could be reinvested.
• Director Loans: The director has provided unsecured, interest-free loans, which help liquidity but increase dependency on personal funding.
• Early Stage: Being just over one year old, the company is likely still in investment and growth mode, which can explain initial losses or low equity.

Overall, the financial health is fragile but not unexpected for a start-up in a creative industry. The lack of profitability and working capital deficiency means the company is at risk if cash inflows do not improve steadily.

---

4. Recommendations

To improve financial wellness and restore "healthy cash flow," the company should consider the following:

1. Improve Working Capital Management:

   • Accelerate debtor collections.
   • Negotiate longer payment terms with creditors.
   • Avoid further short-term liabilities that outpace liquid assets.

2. Reinvest Profits Rather Than Pay Dividends:

   • Suspend dividend payments until a stable positive cash flow and equity base are established.
   • Retain earnings to build reserves and reduce reliance on director loans.

3. Strengthen Capital Base:

   • Consider additional equity funding from the director or external investors to increase net assets.
   • Formalize director loans with repayment plans or convert some loans to equity if appropriate.

4. Monitor Tax Liabilities Closely:

   • Ensure timely payment of tax and social security to avoid penalties and interest.
   • Engage with a tax advisor to optimize tax planning and cash flow timing.

5. Develop a Detailed Cash Flow Forecast:

   • Project cash inflows and outflows for the next 12 months.
   • Identify any potential shortfalls early and plan mitigating actions.

6. Review Operating Costs:

   • Keep overheads lean.
   • Focus on profitable projects with reliable cash inflows.

---

Medical Analogy Summary

ARCADIA PRODUCTIONS LTD is currently showing "symptoms of financial distress" akin to a patient with low blood pressure and dehydration—its liquidity and capital reserves are dangerously low. However, as a young company, this condition is often temporary if managed carefully. With attentive "treatment" focusing on cash flow improvement and capital strengthening, the company has the potential to recover and stabilize its financial health.

---