ART OF DRAG LIMITED

Executive Summary

Art of Drag Limited shows a sound financial foundation typical of a new, micro-sized creative business with positive working capital and liquidity. While the business is stable and compliant, expanding cash reserves and diversifying income will be key to sustaining growth and mitigating early-stage risks. Careful monitoring of cash flow and liabilities is recommended as the company develops beyond its startup phase.

ART OF DRAG LIMITED - Analysis Report

Company Number: 14528255

Analysis Date: 2025-07-29 14:13 UTC

Financial Health Assessment of Art of Drag Limited

---

1. Financial Health Score: B

Explanation:
Art of Drag Limited demonstrates a solid start with positive net current assets and shareholders' funds shortly after incorporation. However, the company is still in its infancy (incorporated late 2022), with limited operational history and modest cash reserves. The financial position is stable but early-stage risks remain. The "B" grade reflects generally healthy fundamentals with room to strengthen financial resilience and growth capacity.

---

2. Key Vital Signs

Metric	Value (£)	Interpretation
Cash at Bank	4,375	Healthy cash balance relative to current liabilities; indicates liquidity to meet short-term obligations.
Current Liabilities	3,223	Manageable short-term debts; company can cover these with its available cash and receivables.
Net Current Assets	1,152	Positive working capital ("healthy pulse") showing the company can fund day-to-day operations.
Shareholders' Funds	1,152	Positive equity base; indicates the company’s net worth after liabilities — a sign of financial stability.
Called-up Share Capital	1	Nominal capital invested; typical for a startup but low, indicating reliance on retained earnings or external funding.
Employee Count	1	Micro entity with a single employee (the director); limits operational scale and human resource capacity.

Additional Notes:

• The company is exempt from audit as per small company regulations, which is typical and does not imply issues.
• No overdue filings or penalties, indicating compliance health.
• Director holds 75-100% ownership and voting rights, centralizing control which may impact governance but provides clear leadership.

---

3. Diagnosis

Art of Drag Limited is in a stable financial state typical of a micro-sized, early-stage creative enterprise. The positive net current assets and liquidity ("healthy cash flow") suggest no immediate distress. The small scale of operations (single employee/director) and minimal capital base imply the company is in a formative phase, focusing likely on establishing its business model and market presence.

The absence of significant liabilities or debt exposure reduces financial risk. However, the low amount of share capital and modest retained earnings mean the company may have limited buffer against unforeseen expenses or a downturn. This "early-stage pulse" is normal but requires monitoring as the company grows.

The sector classification ("artistic creation") suggests income may be project or client dependent, which can lead to fluctuating revenues. The company should watch for signs such as declining cash balances or increases in short-term liabilities which could signal operational stress.

---

4. Recommendations

• Build Cash Reserves: Continue to maintain and grow cash balances to increase operational resilience and manage any seasonal revenue variability.
• Diversify Income Sources: Develop multiple revenue streams or client engagements to smooth cash inflows and reduce dependency on any single source.
• Monitor Working Capital: Keep a close eye on receivables and payables to ensure net current assets remain positive, avoiding liquidity "symptoms of distress."
• Plan for Growth: Consider incremental capital injections or external funding to expand business activities beyond the current micro scale.
• Governance & Compliance: Maintain prompt filing and compliance to prevent penalties and uphold good standing. As the business grows, consider adding governance controls or advisors for balanced decision-making.
• Financial Reporting Development: As operations expand, moving beyond exemption thresholds will require audited accounts and more detailed financial reporting—prepare for this transition early.

---