CERULEAN MIND LIMITED

Executive Summary

Cerulean Mind Limited is facing early-stage financial distress marked by negative working capital and a significant decline in net assets, signalling liquidity challenges and erosion of financial resilience. Immediate action is required to improve cash flow, control costs, and strengthen the equity base to prevent worsening financial health. With focused management and possible capital support, the company can stabilize and regain financial stability.

CERULEAN MIND LIMITED - Analysis Report

Company Number: 13868939

Analysis Date: 2025-07-29 17:54 UTC

Financial Health Assessment of CERULEAN MIND LIMITED

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1. Financial Health Score: D

Explanation:
The company is exhibiting significant financial stress symptoms, primarily indicated by negative net current assets (working capital deficit) and a drastic reduction in net assets within the latest financial year. While still solvent, these warning signs suggest liquidity challenges and a fragile balance sheet, warranting attention to avoid potential distress.

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2. Key Vital Signs

Metric	2023 (Previous Year)	2024 (Current Year)	Interpretation
Fixed Assets (£)	2,285	1,143	Declining fixed assets could indicate asset disposals or depreciation.
Current Assets (£)	21,555	24,193	Slight increase in short-term resources, generally healthy.
Current Liabilities (£)	21,077	25,237	Increase in short-term obligations, a pressure on liquidity.
Net Current Assets (Working Capital) (£)	+478	-1,044	Shift from positive to negative working capital signals liquidity strain.
Net Assets (£)	2,763	99	Sharp reduction in net worth indicates erosion of shareholder equity.
Shareholders’ Funds (£)	2,763	99	Reflects the company's residual interest; very low now, signaling vulnerability.

Interpretation of Vital Signs:

• The negative working capital (net current assets of -£1,044) is akin to a patient showing symptoms of dehydration — the company’s liquid resources are insufficient to cover short-term debts, risking operational disruptions.
• The steep decline in net assets from £2,763 to £99 resembles a weakening immune system, suggesting the company has absorbed losses or asset write-downs, undermining its financial resilience.
• The increase in current liabilities alongside a reduction in fixed assets may indicate reliance on short-term credit and possible asset sales to manage cash flow, which is not sustainable long-term.

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3. Diagnosis

CERULEAN MIND LIMITED shows symptoms of financial distress, particularly in liquidity and capital structure. The company’s working capital has deteriorated from a mild surplus to a deficit, implying it may be struggling to meet its short-term obligations comfortably. The drastic fall in net assets suggests accumulated losses or impairments, which diminishes the buffer against future shocks.

Although the company remains solvent with positive total assets over liabilities, the thin margin (net assets of only £99) places it very close to the edge. This fragile state could impair the company's ability to invest, secure financing, or sustain operations without corrective measures.

Furthermore, the company is in the "micro" account category, indicating it is in early stages or small scale, which can mean limited financial resources and higher vulnerability to market or operational fluctuations.

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4. Recommendations

To restore financial health and strengthen the company’s financial immune system, the following targeted actions are advised:

1. Improve Liquidity Management:

   • Tighten credit control to accelerate receivables collection.
   • Negotiate longer payment terms with suppliers to ease cash outflows.
   • Consider short-term financing options or overdraft facilities to cover liquidity gaps safely.

2. Cost Control and Expense Reduction:

   • Review operational expenses for unnecessary costs or inefficiencies.
   • Prioritize critical expenditures that support revenue generation or cash flow.

3. Capital Injection or Equity Support:

   • The sole shareholder/director (Mr. Lee Carswell) may consider injecting additional equity to rebuild net asset base and absorb losses.
   • Explore potential external investors or grants aligned with the IT consultancy sector.

4. Asset Utilization and Review:

   • Assess fixed assets for potential redeployment or sale to generate cash without harming core operations.
   • Avoid further erosion of fixed assets unless strategically necessary.

5. Strategic Business Review:

   • Evaluate the business model and revenue streams for sustainability and growth opportunities.
   • Seek professional financial advice to develop a turnaround or growth plan.

6. Regular Monitoring:

   • Implement monthly cash flow forecasting and financial monitoring to detect early signs of stress and react promptly.

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Medical Analogy Summary:
CERULEAN MIND LIMITED currently suffers from "liquidity dehydration" and "capital immune weakness," showing symptoms that if untreated, could lead to severe financial illness. Prompt "hydration" through cash management and "immune system strengthening" via capital support are critical to restoring health.

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