AURA SOFTWARE LTD

Executive Summary

AURA SOFTWARE LTD, a micro-entity in IT services, shows a fragile financial condition with minimal net assets and working capital just above liabilities. The company is solvent but vulnerable to cash flow disruptions, typical for early-stage startups. Strengthening liquidity and moving toward profitability through careful financial management are critical next steps.

AURA SOFTWARE LTD - Analysis Report

Company Number: 13789309

Analysis Date: 2025-07-20 16:48 UTC

Financial Health Assessment for AURA SOFTWARE LTD

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1. Financial Health Score: D

Explanation:
The company's financial health is currently fragile, reflected by very thin net current assets and minimal net assets. Although it remains solvent with positive net assets, the margin of safety is extremely narrow, indicating vulnerability to any cash flow disruptions or unexpected liabilities. The repeated low net asset base and minimal working capital suggest early-stage business challenges typical for a micro-entity startup but warrant concern and active management.

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2. Key Vital Signs:

Metric	2024 Value (£)	Interpretation
Current Assets	10,979	Cash and short-term receivables have increased marginally, a positive sign.
Current Liabilities	10,875	Almost equal to current assets, indicating tight liquidity.
Net Current Assets (Working Capital)	104	Very low positive working capital — "barely breathing" financially.
Net Assets / Shareholders' Funds	104	Extremely low equity base, indicating minimal cushion against losses.
Employee Count	1	Very small operation, consistent with micro-entity classification.

Interpretation:

• The "vital signs" indicate the company is maintaining solvency but with very limited financial reserves.
• The small net current assets suggest the company has a "weak pulse" in liquidity terms, leaving it exposed to short-term financial stress.
• The slight increase in current assets from prior year is a positive symptom, but the overall financial body remains thin.
• Low net assets imply the business has little retained profit or capital cushion to support growth or absorb setbacks.
• The company is in the typical early-life stage for a micro-entity, with minimal staffing and resources.

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3. Diagnosis:

• Liquidity & Cash Flow: AURA SOFTWARE LTD has just enough liquid assets to meet current liabilities, indicating "healthy cash flow" is marginal. There is no significant buffer to withstand delays in payments or unexpected expenses. The company must monitor cash flow closely to avoid symptoms of financial distress such as late payments or overdrafts.
• Capital Structure: The equity base is minimal (£104), showing that the business is likely reliant on ongoing funding from the owner or external sources to sustain operations. The absence of fixed assets or retained earnings suggests limited reinvestment or asset accumulation.
• Profitability: No explicit profit and loss data is provided, but the static low net assets imply limited or no accumulated profits. This is typical in initial years but means the company is yet to build a financially robust foundation.
• Operational Scale: With only one employee and micro-entity status, the company is likely in an early or developmental stage, focusing on software development and IT consultancy as per SIC codes.
• Risk Factors: The company’s financial structure leaves it vulnerable to operational hiccups, market fluctuations, or client payment delays. Without stronger net assets or working capital, the "symptoms" could escalate into financial distress if not actively managed.

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4. Recommendations:

• Increase Working Capital: Explore avenues to boost current assets—such as accelerating receivables collection or securing short-term financing—to build a safety net against liquidity shocks.
• Profitability Focus: Prioritize strategies to enhance revenue streams and control costs to move toward profitability and accumulation of retained earnings.
• Capital Injection: Consider additional equity funding or owner loans to strengthen net assets and build financial resilience.
• Cash Flow Management: Implement rigorous cash flow forecasting and monitoring to avoid cash shortages.
• Monitor Liabilities: Keep current liabilities tightly controlled to prevent overextension; negotiate extended payment terms with suppliers if possible.
• Growth Planning: As the business matures, plan for gradual scaling of operations backed by stronger financial footing.
• Regular Financial Reviews: Conduct periodic financial health assessments to detect early warning signs and adjust strategies proactively.

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