Company Number: 12825854

Analysis Date: 2025-07-20 16:09 UTC

Financial Health Assessment for Chrysalis Consult Limited

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1. Financial Health Score: B

Explanation:
Chrysalis Consult Limited exhibits generally sound financial health with positive net assets, healthy working capital, and a strong equity base relative to its scale. However, the recent decline in net assets and cash reserves compared to previous periods signals emerging signs of financial stress that warrant close monitoring and proactive management.

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2. Key Vital Signs

Metric	Latest (31 Mar 2025)	Interpretation
Net Assets	£37,566	Positive and indicates solvency; however, down from £83,055 (Aug 2022).
Current Assets	£47,690	Adequate liquidity but reduced from prior levels.
Cash Balance	£32,526	Healthy cash cushion but significantly lower than previous £62,661 (Sep 2024).
Current Liabilities	£14,748	Manageable short-term obligations.
Net Current Assets	£32,942	Positive working capital shows ability to cover short-term debts.
Shareholders’ Funds	£37,566	Reflects retained earnings and equity investment.
Debtors	£15,164	Moderate receivables; timely collection essential.
Tangible Assets	£4,624	Limited fixed asset base appropriate for consultancy business.
Directors’ Advances/Owed	£11,323 owed by company to directors	Indicates reliance on director funding; potential liquidity pressure.

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3. Diagnosis: Financial Symptoms and Underlying Health

• Healthy Cash Flow Signs: The company maintains positive cash and net current assets, indicating it can meet its immediate liabilities without distress. The positive working capital is a strong “heartbeat” of liquidity health.

• Symptom of Asset and Equity Decline: The reduction of net assets from above £80k in prior years to £37,566 is a notable “weight loss” in financial strength, suggesting either increased operational costs, reduced profitability, or distributions that have eroded retained earnings.

• Reliance on Director Funding: The company owes over £11k to directors, a “supportive IV drip,” indicating temporary external funding to maintain liquidity. While common in SMEs, sustained reliance may signal cash flow challenges.

• Receivables Management: Debtors are moderate but have fluctuated, and timely collection is critical to avoid “blockages” in cash flow.

• Small Asset Base: The tangible assets are minimal, typical for a management consultancy, which relies more on intellectual capital than physical assets.

• Compliance and Governance: The company is current with filings, which is a positive “clean bill of compliance” and suggests good governance.

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4. Recommendations: Treatment Plan for Financial Wellness

1. Improve Profit Retention and Cost Control:
   Investigate reasons behind the decline in net assets and implement tighter cost management or pricing strategies to restore profitability and rebuild reserves.

2. Enhance Cash Flow Management:
   Prioritize debtor collections to prevent cash flow “blockages.” Consider offering early payment incentives or more rigorous credit control.

3. Reduce Reliance on Director Loans:
   Develop a plan to repay director advances to strengthen the company’s independent liquidity position and reduce “dependency symptoms.”

4. Regular Financial Monitoring:
   Establish monthly financial reviews focusing on cash flow forecasts, working capital, and profitability to detect early “warning signs” and act promptly.

5. Consider Strategic Growth or Diversification:
   Explore opportunities to increase revenues or diversify client base to stabilize and enhance financial “vitality.”

6. Maintain Compliance Discipline:
   Continue timely filings and governance practices to avoid regulatory “complications” which can impair reputation and finances.

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