CLARENCE CONSULTING LIMITED

Executive Summary

Clarence Consulting Limited shows robust financial health for its first year, with strong liquidity, positive net assets, and low liabilities—a solid foundation typical for a micro-entity consultancy. While current operations are healthy, ongoing monitoring of cash flow and careful planning for growth will be key to sustaining financial wellness as the business expands.

CLARENCE CONSULTING LIMITED - Analysis Report

Company Number: 14987254

Analysis Date: 2025-07-29 18:59 UTC

Financial Health Assessment for Clarence Consulting Limited

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1. Financial Health Score: B

Explanation:
As a newly incorporated micro-entity with its first financial year completed, Clarence Consulting Limited shows a solid foundation with positive net assets and healthy working capital. The score B reflects good financial status for a start-up, with room for growth and vigilance on managing liabilities and cash flow.

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2. Key Vital Signs

Metric	Value (£)	Interpretation
Fixed Assets	651	Minimal long-term assets, typical for a start-up
Current Assets	32,665	Indicates good liquidity and cash reserves
Current Liabilities	11,706	Short-term obligations are moderate
Net Current Assets	21,069	Strong working capital, "healthy cash flow" indicator
Total Assets Less Current Liabilities	21,720	Solid net asset base for a newly formed company
Net Assets (Shareholders’ Funds)	21,720	Positive equity, no signs of distress
Average Number of Employees	1	Lean operation, low overheads

Interpretation:
The company’s working capital (net current assets) is positive and substantial relative to liabilities, suggesting the company can comfortably meet its short-term debts. The net asset figure being positive and equal to shareholder funds shows no accumulated losses or financial strain yet. The small fixed asset base aligns with a service-oriented consultancy business.

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3. Diagnosis: What the Financial Data Reveals About Business Health

Clarence Consulting Limited exhibits the classic "healthy vital signs" of a micro start-up in professional services:

• Liquidity: The company’s current assets are nearly three times its current liabilities, indicating a strong liquidity position. This suggests a low risk of cash flow problems in the short term.
• Capitalization: The company is adequately capitalised with net assets equalling shareholder funds, indicating the owner has invested sufficient equity for initial operations.
• Operational Efficiency: Operating with just one employee (the director) keeps overheads low, which is appropriate for the business model and size.
• Asset Base: The low fixed asset value and depreciation policy reflect the nature of consulting businesses, which typically rely more on intellectual capital than physical assets.
• Compliance and Governance: Accounts are filed on time, and there is no indication of overdue returns or financial distress procedures (e.g., liquidation, administration).

Potential "symptoms" to monitor as the business evolves include maintaining profitability and cash flow as it scales, managing any increase in liabilities, and ensuring that the working capital remains healthy.

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4. Recommendations: Specific Actions to Improve Financial Wellness

• Cash Flow Monitoring: Regularly review cash inflows and outflows to avoid any liquidity crunch, especially as client billing cycles can be variable in consultancy.
• Build Financial Resilience: Consider creating a small cash reserve or credit facility to cover unforeseen expenses or delayed payments.
• Growth Investment: Plan judiciously for investing in marketing or business development to grow revenue without compromising liquidity.
• Financial Reporting: As the company grows beyond micro thresholds, prepare to upgrade accounting and reporting processes to maintain transparency and compliance.
• Risk Management: Establish basic financial controls and periodic reviews to catch early warning signs of financial stress, such as overdue receivables or rising liabilities.
• Tax Planning: Engage with a tax advisor early to optimize corporation tax, VAT registration thresholds, and personal tax implications for the director.

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