AUTOMATIC PANIC LTD

Executive Summary

AUTOMATIC PANIC LTD shows financial strains typical of an early-stage micro-entity in the performing arts, with negative working capital and net assets indicating liquidity and solvency challenges. While currently operational, the company needs to improve cash flow management, strengthen its capital base, and control costs to achieve financial stability and long-term sustainability.

AUTOMATIC PANIC LTD - Analysis Report

Company Number: 13118193

Analysis Date: 2025-07-20 13:19 UTC

Financial Health Assessment: AUTOMATIC PANIC LTD

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1. Financial Health Score: D

Explanation:
The company shows a consistent pattern of negative net current assets and net liabilities over the past four years, indicating financial strain. While it remains an active micro-entity with steady small current assets and liabilities, the persistent working capital deficit and negative net assets suggest symptoms of financial distress. This results in a below-average financial health grade.

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2. Key Vital Signs

Metric	2024 (£)	Interpretation
Fixed Assets	0	No long-term investments or property assets.
Current Assets (Cash, Debtors)	1,374	Limited short-term liquidity resources.
Current Liabilities	8,763	Short-term debts and payables exceed assets.
Net Current Assets	-7,389	Negative working capital; liabilities outweigh assets.
Net Assets (Equity)	-7,387	Shareholders' funds are negative, indicating accumulated losses or deficits.
Share Capital	2	Minimal equity invested by shareholders.
Number of Employees	2	Small workforce consistent with micro status.

Interpretation:

• Negative working capital ("symptoms of distress"): The company’s current liabilities far outweigh its current assets, meaning it may struggle to meet short-term obligations.
• Negative net assets ("financial anemia"): The company’s liabilities exceed its assets, indicating erosion of equity and possible accumulated losses.
• Absence of fixed assets ("no physical backbone"): The company holds no long-term tangible or intangible assets, which may limit collateral for financing or capital growth.
• Small scale operation ("micro-entity"): The business is small with limited resources, which can be both a strength (agility) and a risk (limited buffers).

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3. Diagnosis

AUTOMATIC PANIC LTD presents a financial profile typical of a small creative enterprise in its early years, operating within the performing arts sector. The company exhibits chronic liquidity challenges with current liabilities significantly exceeding current assets, resembling a patient with restricted cash flow and high short-term obligations. The persistently negative net assets suggest the business is either operating at a loss or has accumulated deficits that have not yet been rectified.

The absence of fixed assets means the company relies heavily on intangible outputs or services rather than physical capital. This can be common in performing arts companies but also means limited security for creditors or lenders.

Despite these "symptoms," the company remains active and compliant with filing deadlines, indicating management is maintaining operational control. However, the financial "vital signs" suggest limited financial resilience and potential vulnerability to unexpected shocks or increased liabilities.

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4. Recommendations

To improve financial wellness and build a healthier financial profile, the company should consider:

• Improve Liquidity Management:

  • Seek to increase current assets by accelerating debtor collections or securing short-term financing.
  • Negotiate longer payment terms with suppliers to reduce current liabilities.
  • Monitor cash flow closely to avoid liquidity crises.

• Strengthen Capital Base:

  • Consider raising additional equity capital or reinvesting profits to reduce net liabilities and improve net assets.
  • If possible, secure grants or funding tailored to performing arts enterprises to bolster financial resources.

• Cost Control and Profitability:

  • Review operating expenses and streamline overheads to improve profitability.
  • Explore diversified revenue streams within artistic creation to enhance income stability.

• Asset Development:

  • Although fixed assets are currently zero, evaluating investment in key equipment or intellectual property could provide future leverage.

• Financial Monitoring:

  • Implement regular financial reviews to track working capital and solvency metrics, enabling early detection of distress symptoms.

• Professional Advice:

  • Engage financial advisors or accountants to assist with budgeting, cash flow forecasting, and funding strategies tailored to micro-entities in the arts sector.

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