BASEMENT SOLUTIONS LIMITED

Executive Summary

BASEMENT SOLUTIONS LIMITED is a newly formed micro-entity showing a healthy liquidity position with positive working capital but very low equity, indicating financial fragility typical of startups. The company currently operates without employees and carries significant deferred income, requiring careful cash flow management. To improve financial wellness, strengthening the equity base and diligent monitoring of obligations and cash flow are essential.

BASEMENT SOLUTIONS LIMITED - Analysis Report

Company Number: 14980439

Analysis Date: 2025-07-20 12:24 UTC

Financial Health Assessment: BASEMENT SOLUTIONS LIMITED (As of 31 July 2024)

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1. Financial Health Score: C

Explanation:
Given this is a newly incorporated micro-entity (incorporated in July 2023) with its first set of accounts filed, the financial data is limited but provides initial insight. The company shows positive working capital but a very small equity base, indicating early-stage financial structure. The score reflects an early-stage entity with some healthy signs but also inherent risks due to limited operating history and very low reserves.

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2. Key Vital Signs

Metric	Value (£)	Interpretation
Current Assets	35,048	Healthy level of liquid and short-term assets available to meet liabilities.
Current Liabilities	15,182	Short-term debts due within one year, moderate compared to current assets.
Accruals and Deferred Income	19,478	Payments received or expenses accrued that will affect future periods, significant amount.
Net Current Assets (Working Capital)	35,048 - 15,182 = 19,866	Positive working capital indicates the company can cover short-term obligations.
Shareholders' Funds (Equity)	388	Very low equity base; minimal retained earnings or initial capital contribution reflected.
Employee Count	0	No employees yet, indicating a lean structure possibly relying on contractors or director input.

What These Vital Signs Indicate:

• The company currently has a positive "pulse" in terms of liquidity, with current assets exceeding current liabilities, suggesting no immediate cash flow distress.
• However, the very small shareholders’ funds indicate a fragile "immune system" — the company has limited buffer to absorb losses or shocks.
• Accruals and deferred income are quite significant relative to liabilities and equity, which may indicate prepayments or advance billing that will require future service delivery.

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3. Diagnosis

• Early-stage Business: The company has only been operational for just over one year and has no employees, which is typical for a startup or a business in the setup phase.
• Healthy Liquidity but Low Capitalisation: The company’s working capital is healthy, meaning it can currently meet its short-term obligations without stress. However, the extremely low equity base (shareholders’ funds of £388) suggests that the company has minimal financial reserves. This is common for a new micro entity but is a symptom of financial fragility.
• Revenue Recognition / Deferred Income: The sizeable deferred income amount may reflect customer deposits or advance payments; this creates an obligation to deliver future services and must be managed carefully to avoid future cash flow issues.
• No Audit and Micro Entity Reporting: The company benefits from simplified reporting and audit exemption, which reduces administrative burden but also means less external scrutiny.

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4. Recommendations

• Increase Equity Base: Consider injecting additional capital or retaining earnings to build a stronger equity foundation. This will improve financial resilience and allow for growth investment.
• Monitor Cash Flow Closely: As the business begins trading and delivering services, ensure cash inflows align with deferred income obligations to maintain a healthy cash flow "heartbeat."
• Plan for Revenue Growth and Costs: Hiring employees or subcontractors may be necessary as operations expand. Prepare budgets and forecasts to avoid surprises in working capital needs.
• Maintain Accurate Accruals: Keep detailed records of deferred income and accrued expenses to avoid future strain on liquidity.
• Regular Financial Reviews: Establish a routine diagnostic review of financial health every quarter to catch any "symptoms" of distress early.
• Consider External Advice: As the company scales, consulting with financial or accounting experts can provide guidance on tax planning, funding, and compliance.

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