CHAIM VCHESED LTD

Executive Summary

CHAIM VCHESED LTD is currently facing liquidity challenges with a working capital deficit and a thin equity base, indicating financial strain. While the company remains solvent and operational, careful financial management and strategic actions are needed to strengthen its financial position and avoid potential distress. Immediate focus on cash flow management and equity enhancement will help improve its financial resilience.

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Company Analysis

This analysis is opinion only and should not be interpreted as financial advice.

CHAIM VCHESED LTD - Analysis Report

Company Number: 13560030

Analysis Date: 2025-07-20 15:29 UTC

Financial Health Assessment Report for CHAIM VCHESED LTD


1. Financial Health Score: C

Explanation:
The company exhibits signs of financial strain with negative net current assets (working capital deficit) for the latest financial year, indicating liquidity challenges. While it has a positive net asset position, the margin is thin and declining. The score "C" reflects a company that is currently operational but showing symptoms of financial distress requiring careful management and remedial action to restore financial robustness.


2. Key Vital Signs

Metric 2024 (£) Interpretation
Current Assets 10,459 Primarily cash, showing some liquidity but limited overall resources.
Current Liabilities 10,777 Short-term debts slightly exceed current assets, signaling strained liquidity (working capital deficit of £318).
Net Current Assets -318 Negative working capital indicates potential difficulty meeting short-term obligations promptly.
Net Assets (Equity) 962 Positive but low equity base; company has a small buffer against losses.
Cash Balance 10,458 Healthy cash presence relative to total current assets; good immediate liquidity.
Tangible Fixed Assets 1,280 Moderate investment in long-term assets, depreciating over time.
Shareholders’ Funds 962 Equity financed mostly through retained earnings and minimal share capital (£1).
Average Employees 1 Very small operational scale, likely a micro or small company.

3. Diagnosis: Financial Symptoms and Underlying Business Health

  • Liquidity Stress: The company’s most pressing symptom is a working capital deficit. Current liabilities (£10,777) slightly exceed current assets (£10,459), despite a healthy cash balance. This indicates that while cash is available, the overall short-term assets are insufficient to comfortably cover immediate debts and obligations. This "cash flow tightrope" puts the company at risk if unexpected expenses or payment delays occur.

  • Low Equity Cushion: With net assets just under £1,000, the equity buffer is minimal. This thin margin means the company has limited capacity to absorb financial shocks or losses without risking insolvency.

  • Asset Depreciation: Tangible fixed assets have declined in net book value, reflecting depreciation charges. While normal, it suggests the company is not currently expanding its asset base, which could limit growth potential.

  • Business Scale and Complexity: Operating with one employee and minimal assets, the company is in the micro/small category, which typically involves low-risk but also lower revenue and profitability potential.

  • Director and Ownership Changes: The recent change in significant control indicates possible restructuring or ownership consolidation, an important factor in strategic direction and financial management.

  • No Overdue Filings: The company is compliant with statutory filing deadlines, an indicator of good governance and management discipline.


4. Recommendations: Actions to Improve Financial Wellness

  1. Improve Working Capital Management:

    • Develop tighter control over payables and receivables to ensure current liabilities do not exceed current assets.
    • Explore short-term financing options such as overdrafts or invoice financing to smooth cash flow fluctuations.
  2. Increase Equity Base:

    • Consider capital injection from existing or new shareholders to strengthen the equity cushion.
    • Retain earnings where possible rather than distributing profits.
  3. Monitor and Control Costs:

    • Keep operating costs minimal and scrutinize any discretionary spending given the narrow financial margins.
  4. Strategic Planning:

    • Evaluate business growth opportunities cautiously, focusing on improving profitability and cash inflows.
    • Maintain clear communication with stakeholders, including directors and significant controllers, about financial health and operational plans.
  5. Regular Financial Review:

    • Conduct monthly cash flow forecasts to anticipate liquidity issues early.
    • Engage with financial advisors or accountants for tailored financial planning and risk mitigation.
  6. Prepare for Ownership Transition:

    • Ensure smooth management continuity and clear governance in light of recent changes in significant control.

Financial Health Summary in Medical Terms

CHAIM VCHESED LTD currently exhibits symptoms of financial distress primarily due to a working capital deficit, akin to a patient with borderline vital signs — liquidity is precarious but not yet critical. The healthy cash flow "heartbeat" is present but fragile. Without intervention to bolster liquidity and equity, the financial condition could deteriorate, leading to "organ failure" in business terms, i.e., insolvency risk. Proactive management and financial "therapy" are essential to restore full financial health.



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