ARGYLE IT & EDUCATION LIMITED

Executive Summary

ARGYLE IT & EDUCATION LIMITED has shown commendable recovery from prior negative equity but continues to face liquidity challenges due to negative working capital. While fixed asset investments indicate long-term commitment, improving cash flow management and restructuring short-term liabilities are crucial to stabilizing operations. Focused financial discipline and strategic planning can enhance its resilience and growth prospects.

ARGYLE IT & EDUCATION LIMITED - Analysis Report

Company Number: SC684646

Analysis Date: 2025-07-29 20:02 UTC

Financial Health Assessment of ARGYLE IT & EDUCATION LIMITED

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1. Financial Health Score: C

Explanation:
The company shows signs of recovery and improvement after previous financial distress but still displays vulnerability in liquidity and working capital management. While net assets have shifted from negative to positive, current liabilities significantly exceed current assets, indicating ongoing cash flow challenges. The score "C" reflects a cautious outlook with improvement potential but persistent symptoms of financial strain.

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2. Key Vital Signs

Metric	2023 Value	Interpretation
Fixed Assets	£114,365	Healthy investment in long-term assets, increased steadily over 4 years.
Current Assets	£39,530	Increased significantly, showing improved liquidity position, but still low relative to liabilities.
Current Liabilities	£111,760	High short-term obligations, nearly 3x current assets, indicating liquidity risk.
Net Current Assets	-£72,131	Negative working capital, a symptom of cash flow pressure and potential short-term funding gaps.
Total Assets Less CL	£42,234	Positive after deducting current liabilities, showing some buffer from fixed assets.
Creditors >1 Year	£14,381	Some longer-term liabilities present, manageable but adds to total debt burden.
Net Assets / Shareholders' Funds	£27,853	Positive equity capital, showing recovery from previous losses and improved solvency.
Number of Employees	2	Small scale operation consistent with Micro entity classification.

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3. Diagnosis: Financial Symptoms and Underlying Health

• Liquidity Distress: The company exhibits a classic "symptom of distress" in its liquidity profile. Current liabilities outstrip current assets by a wide margin (-£72k net current assets), suggesting difficulty in meeting short-term obligations without turning to external financing or asset sales.
• Improvement Trajectory: From 2021 and 2022, the company was in negative equity and net asset positions, signaling financial distress or insolvency risk. The 2023 figures show a positive turnaround in net assets (£27,853), indicating successful efforts in recapitalization or profit retention.
• Fixed Asset Base: The steady increase in fixed assets (from £56k in 2020 to £114k in 2023) indicates investment in infrastructure or equipment supporting business operations, which can be a good indicator of long-term viability if these assets are productive.
• Working Capital Strain: Persistent negative working capital suggests that day-to-day operations may be strained by cash flow cycles, potentially causing reliance on credit or delaying payments.
• Micro Entity Status: The company's classification as a Micro entity means it has simplified reporting and limited financial disclosure. This limits transparency but is consistent with its small size and resource constraints.
• Governance and Control: The company is controlled by two directors, with clear ownership stakes and voting rights. This concentrated control can facilitate quick decisions but also concentrates risk if leadership mismanages finances.

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4. Recommendations: Actions to Improve Financial Wellness

• Improve Cash Flow Management:

  • Accelerate debtor collections and negotiate better payment terms with creditors to reduce the negative working capital gap.
  • Implement cash flow forecasting tools to anticipate liquidity shortages and proactively manage short-term funding.

• Review and Prioritize Short-Term Liabilities:

  • Explore restructuring or refinancing of current liabilities to ease immediate cash pressure, possibly converting some short-term debt into longer-term obligations.

• Strengthen Capital Base:

  • Consider additional equity injections or retained earnings accumulation to increase shareholders' funds and provide a stronger buffer.

• Operational Efficiency:

  • Evaluate operational costs and overheads to identify potential savings without compromising service quality.
  • Leverage fixed assets effectively to maximize returns on investments.

• Regular Financial Monitoring:

  • Maintain regular reviews of key financial metrics (liquidity ratios, working capital trends) to detect early symptoms of distress.
  • Prepare for filing deadlines timely to avoid penalties and maintain regulatory compliance.

• Strategic Planning:

  • Develop a medium-term financial plan aligned with business goals in education and IT services sectors, focusing on sustainable growth and profitability.

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