CADENCY LTD

Executive Summary

CADENCY LTD shows signs of financial fragility with low liquidity and minimal equity, earning a financial health score of D. The company faces challenges in meeting short-term obligations, indicating symptoms of financial distress. Immediate focus on cash flow improvement, cost management, and capital strengthening is recommended to stabilize and improve financial health.

CADENCY LTD - Analysis Report

Company Number: 13937600

Analysis Date: 2025-07-29 19:25 UTC

Financial Health Assessment for CADENCY LTD (as of 31 March 2024)

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1. Financial Health Score: D

Explanation:
The company’s financial vital signs reveal significant weaknesses in liquidity and net asset position. While the company remains active, its net current assets are minimal and barely positive, exhibiting symptoms of financial stress. The very low net assets and working capital indicate constrained operational capacity. This grade reflects a fragile financial condition that requires prompt attention to avoid deterioration.

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2. Key Vital Signs

Metric	2024 Value	Interpretation
Current Assets	£4,918	Low current assets indicate limited cash and receivables to meet short-term obligations.
Current Liabilities	£5,010	Slightly higher than current assets, implying near-term obligations may strain liquidity.
Net Current Assets (Working Capital)	£-92	Negative working capital, a warning sign that day-to-day liquidity is under pressure.
Net Assets (Shareholders’ Funds)	£92	Virtually zero equity, indicating the company’s resources barely cover liabilities.
Employee Count	2	Very small workforce, typical for a micro-entity but limits operational scalability.
Account Category	Micro	Simplified reporting but limited financial depth for analysis.
Industry SIC Codes	82990, 70229	Business support and management consultancy - typically service-based with low fixed assets.

Interpretation:
The company’s balance sheet shows a barely positive net asset position (£92) after subtracting liabilities from assets, which is a fragile financial state often described as "walking a tightrope" in liquidity terms. The current liabilities slightly exceed current assets, a symptom of potential cash flow strain ("healthy cash flow" absent). Over the last two years, net current assets hovered near zero or negative, indicating persistent liquidity challenges.

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3. Diagnosis

CADENCY LTD presents symptoms of financial distress primarily driven by limited liquidity and negligible equity buffer. The company’s ability to meet short-term obligations is precarious, with current liabilities very close to or exceeding current assets. This fragile working capital situation may limit operational flexibility and increase vulnerability to unexpected expenses or cash flow disruptions.

The micro-entity status reflects a small-scale operation with minimal asset base and low complexity. This size can be a double-edged sword — easier to manage but more susceptible to shocks without financial reserves.

The company’s financial "vital signs" indicate a condition akin to a "patient with borderline vital signs" — still alive but at risk of collapse without intervention. The stable employee count and active status are positive signs but do not offset the underlying financial weaknesses.

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4. Recommendations

To improve financial wellness and strengthen the company’s financial health, the following actions are advised:

• Enhance Cash Flow Management:
  Improve collection processes and negotiate better payment terms with creditors to boost net current assets and avoid negative working capital.

• Increase Equity or Capital Injection:
  Consider additional funding from shareholders or external investors to build a financial buffer and enhance net assets.

• Cost Control Measures:
  Review expenses rigorously to reduce overheads and improve profitability, especially given the small team size.

• Operational Efficiency:
  Explore ways to increase revenues within current capacity or through strategic partnerships to reduce financial strain.

• Regular Financial Monitoring:
  Implement tight monthly financial reviews to catch early signs of distress and respond promptly.

• Contingency Planning:
  Prepare for potential cash flow interruptions with contingency plans such as overdraft facilities or short-term loans.

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