AYAN STUDIOS LTD

Executive Summary

AYAN STUDIOS LTD demonstrates a healthy financial foundation for a newly established architectural services company, with positive net assets and working capital indicating good short-term resilience. Key risks include managing a significant corporation tax liability and building cash flow strength during early growth stages. With prudent cash management and profitability focus, the company is well-positioned for sustainable development.

AYAN STUDIOS LTD - Analysis Report

Company Number: 14908279

Analysis Date: 2025-07-20 13:01 UTC

Financial Health Assessment: AYAN STUDIOS LTD (Year Ended 31 May 2024)

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1. Financial Health Score: B

Explanation:
AYAN STUDIOS LTD shows a solid foundation as a newly incorporated architectural services company. With positive net assets, a modest but positive working capital, and no overdue filings or signs of financial distress, the company’s financial “vital signs” indicate a generally healthy start. The grade B reflects a stable early stage but with room for growth and improvement in cash buffer and profitability metrics, which are typical in the initial years of business.

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2. Key Vital Signs (Core Financial Metrics & Interpretation):

Metric	Value (£)	Interpretation
Fixed Assets	1,955	Investment in tangible assets (equipment) indicates commitment to operations. Healthy asset base for a start-up.
Current Assets	9,264	Includes cash and debtors; cash balance (£8,964) is strong relative to liabilities, indicating healthy liquidity.
Current Liabilities	8,613	Short-term debts including corporation tax and other accruals. High relative to cash but manageable with positive working capital.
Net Current Assets (Working Capital)	651	Positive working capital ("breathing room") shows ability to cover short-term obligations.
Net Assets (Equity)	2,606	Positive net assets reflect the company’s residual value after liabilities; small but solid equity base.
Share Capital	2.00 (called up 1 share)	Minimal share capital, typical for small private companies; equity mostly from retained earnings or reserves.
Debtors	300	Low trade receivables; indicates prompt collection or limited credit sales.
Corporation Tax Liability	6,251	Significant tax liability which is a "symptom" to monitor, as it impacts cash flow.
Average Number of Employees	3	Small team consistent with micro/small company profile.

Other Observations:

• No audit required under small company exemption; accounts unaudited but comply with UK accounting standards for small entities.
• Directors appointed recently, indicating fresh management possibly steering growth.
• No overdue statutory filings, indicating good compliance “vital signs.”
• Industry: Architectural and urban planning activities, a sector requiring specialized skills and often project-based revenue.

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3. Diagnosis (What the Numbers Reveal About Business Health):

AYAN STUDIOS LTD is in the incubation phase of its corporate life cycle. The company has established a modest asset base and maintains a positive net asset position. The presence of positive working capital is a good “pulse” indicator, showing the company can meet its immediate liabilities from its current assets, primarily cash.

However, the corporation tax liability of £6,251 is a significant near-term cash outflow that may strain liquidity if not managed carefully. The relatively low trade debtor balance suggests effective debtor collection, reducing risk of cash flow bottlenecks.

The small share capital and equity primarily from retained earnings or reserves indicate the company is relying on operational results and possibly director loans or capital injections for funding. The tangible fixed assets are limited to computer equipment, appropriate for an architectural design business.

The company is compliant with statutory requirements, which is a positive governance sign, and no signs of distress such as overdue accounts or legal encumbrances.

In summary, AYAN STUDIOS LTD shows no symptoms of financial distress but remains in a vulnerable early growth stage where cash flow management and profitability enhancement will be key to avoid future strain.

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4. Recommendations (Actions to Improve Financial Wellness):

• Strengthen Cash Flow Reserves:
  The current cash buffer is healthy but could be vulnerable due to the sizeable corporation tax liability. Consider setting aside funds systematically or negotiating phased tax payments if cash flow tightens.

• Monitor and Manage Tax Obligations:
  The £6,251 corporation tax liability is a “stress symptom” to watch closely. Engage with a tax advisor to ensure timely payments and explore any available reliefs or deferrals.

• Improve Profitability and Margin Tracking:
  As the company grows, implement more detailed cost and margin controls on projects to convert turnover into stronger retained profits, building shareholder funds.

• Plan for Capital Investment and Growth:
  The tangible asset base is limited; plan for necessary investments in technology or software that can enhance productivity and competitiveness.

• Maintain Compliance and Governance:
  Continue timely filing of accounts and confirmation statements to avoid penalties and maintain business reputation.

• Consider Share Capital Strategy:
  Evaluate if increasing share capital or seeking external investment could provide a more robust equity base to support expansion.

• Enhance Debtor Management:
  While current debtors are low, maintain or improve credit control to avoid cash flow risks with larger or more numerous contracts.

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