CADENZA CONSULTING LIMITED

Executive Summary

Cadenza Consulting Limited exhibits positive equity and stable cash but faces early signs of liquidity strain, with negative net current assets and high reliance on director loans. Immediate attention to working capital management and funding structure is needed to prevent financial distress. With prudent cash flow controls and strategic financial planning, the company can restore a healthy financial balance and support sustainable growth.

CADENZA CONSULTING LIMITED - Analysis Report

Company Number: 14574052

Analysis Date: 2025-07-29 19:00 UTC

Financial Health Score: C

The company shows some foundational strengths but also clear warning signs. While shareholders’ funds are positive and there is tangible asset growth, the negative net current assets (working capital deficit) in the latest year indicate liquidity pressure. This suggests the business is struggling to cover short-term liabilities with current assets, a classic symptom of financial distress that requires targeted management.

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Key Vital Signs

Metric	2025 (£)	2024 (£)	Interpretation
Current Assets	47,808	50,761	Slight decline, largely cash-based
Debtors	0	5,713	Debtors eliminated; potential impact on revenue timing
Cash	47,808	45,048	Healthy cash presence maintained
Current Liabilities	48,909	50,231	Slight reduction, but still high
Net Current Assets	-1,101	530	Shift from positive to negative working capital—a red flag
Net Assets / Shareholders’ Funds	1,651	1,605	Marginal growth, positive equity but very low
Tangible Fixed Assets	2,752	1,075	Increased investment in fixed assets
Loans from Directors (part of current liabilities)	41,054	43,272	High reliance on director loans to fund operations

Interpretation:

• Liquidity: The negative net current assets reveal a working capital “deficiency” — the company has slightly more short-term obligations than short-term resources to cover them. This can cause cash flow strain, especially if trade debtors have disappeared (zero debtors in 2025).
• Cash Flow: Cash on hand remains stable, which is positive, but there may be dependency on director loans (£41k) to maintain this.
• Solvency: Shareholders’ funds are positive but very modest (£1.6k), indicating a thin equity buffer. The company is not insolvent but has limited financial cushion.
• Asset Investment: Tangible fixed assets have increased, showing investment, but this ties up cash and may exacerbate liquidity if not carefully managed.
• Debt Structure: Director loans form a significant portion of liabilities, raising concerns about sustainability and potential financial risk if these are recalled.

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Diagnosis

Cadenza Consulting Limited is a young private limited management consultancy that is currently operational. The company’s financial “vital signs” suggest a borderline liquidity issue emerging in the most recent year, as evidenced by the move from positive to negative net current assets. This points to “symptoms of distress” in the company’s short-term financial health — the firm’s current liabilities slightly outweigh its current assets, signaling potential difficulties in meeting immediate obligations without relying on director loans or other short-term funding.

The absence of trade debtors in the latest year could reflect either a change in sales terms or billing cycles, or a collection issue that led to write-offs or no outstanding invoices. While cash levels remain stable, the reliance on director loans to finance operations is a symptom indicating external financial support is necessary. The slight increase in tangible fixed assets shows reinvestment into business tools or infrastructure, which is positive for long-term capability but may strain short-term liquidity.

Overall, the company’s financial condition is fragile. The equity base is positive but minimal, and the working capital deficit raises a cautionary flag similar to a patient showing early signs of dehydration—manageable now but requiring intervention to prevent escalation.

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Recommendations

1. Improve Working Capital Management

   • Reassess credit terms and billing cycles to ensure timely collection of receivables. If sales are now cash-based, confirm this is sustainable and not limiting growth.
   • Negotiate with creditors to extend payment terms where possible, easing short-term cash outflows.

2. Reduce Reliance on Director Loans

   • Develop a plan to gradually repay director loans or convert some into equity if possible, to strengthen the balance sheet.
   • Evaluate the feasibility of external financing options (e.g., small business loans) to diversify funding sources.

3. Enhance Cash Flow Monitoring

   • Implement regular cash flow forecasting to anticipate shortfalls and plan accordingly.
   • Maintain a cash buffer to cover at least 3 months of operating expenses to avoid liquidity crises.

4. Control Fixed Asset Investments

   • Carefully evaluate the timing and necessity of further capital expenditures to avoid overextension of cash resources.
   • Consider leasing options or staged investments to preserve liquidity.

5. Strategic Growth Planning

   • Focus on building a robust client base to improve revenue predictability.
   • Explore opportunities for increasing profitability through service diversification or efficiency gains.

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