CLARIFY CONSULTING LTD

Executive Summary

CLARIFY CONSULTING LTD, as a newly formed micro entity, shows a positive financial start with a small profit, no liabilities, and positive net assets, indicating a healthy initial financial condition. The company should focus on managing costs, building cash reserves, and strategically planning growth to ensure sustainable financial wellness and reduce vulnerability inherent to startups.

CLARIFY CONSULTING LTD - Analysis Report

Company Number: 15482920

Analysis Date: 2025-07-29 16:04 UTC

Financial Health Assessment Report
Company: CLARIFY CONSULTING LTD
Assessment Date: Post 2025-02-28 (Financial Year End)

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1. Financial Health Score: B

Explanation:
The company demonstrates promising early-stage financial health with positive net assets, a modest profit, and no current liabilities. However, as a newly incorporated micro entity with limited financial history and minimal asset base, there is inherent vulnerability. The score B reflects a generally healthy financial "vital sign" profile but acknowledges the infancy of the business and limited scalability evidence.

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2. Key Vital Signs

Metric	Figure	Interpretation
Turnover	£76,051	Modest revenue for first full (~13 month) trading period—a positive sign of market traction.
Profit for the Period	£1,438	Small net profit indicates the business can cover costs and generate surplus, a healthy "heartbeat."
Cost of Materials	£35,676	Represents nearly half of turnover, implying material costs are a significant expense driver.
Staff Costs	£38,600	Staff expense is also a major cost; the business currently operates with 1 employee (the managing director).
Fixed Assets	£0	No capital investments yet—typical for a service consultancy startup.
Current Assets	£1,400	Limited liquid assets signal a cautious cash position but no immediate liquidity stress.
Current Liabilities	£0	Absence of short-term debts or payables—a very healthy liquidity symptom.
Net Assets (Shareholders’ Funds)	£1,400	Positive equity base, indicating the company is solvent at this stage.
Employee Count	1	Minimal operational scale, typical for micro entities in early development.

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3. Diagnosis: Financial Condition Overview

The financial "vitals" reveal a young micro entity in the early stages of trading. The company is showing a weak but positive profit margin and maintains a solvent balance sheet with no current liabilities, suggesting disciplined financial management and a low risk of short-term distress.

The absence of fixed assets is consistent with a consultancy business model that likely relies on intellectual capital rather than physical assets. The significant proportion of turnover spent on materials and staff costs suggests the company is investing heavily in delivering its consulting services, which is expected in a service sector startup.

The sole director, who is also the majority shareholder, suggests streamlined governance but could also mean key person dependency risk.

Overall, there are no symptoms of financial distress such as negative equity, high debt, or cash flow problems. However, the company remains vulnerable to market fluctuations and operational risks typical for startups.

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4. Prognosis: Future Financial Outlook

If current trends continue, the company is well-positioned to maintain solvency and potentially grow revenue and profitability. However, growth will depend on:

• Expanding client base and increasing turnover beyond the initial modest revenues.
• Managing costs, particularly material and staff expenses, to improve profit margins.
• Building a cash reserve to buffer against unforeseen expenses or downturns.
• Possibly investing in fixed assets or technology infrastructure to enhance service delivery and scalability.

Close monitoring of working capital and cash flow will be critical to avoid liquidity "symptoms" such as late payments or reliance on external financing.

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5. Recommendations

• Enhance Cash Flow Management: The company should maintain a healthy cash flow "pulse" by closely monitoring receivables and payables, even though current liabilities are nil.
• Cost Control: Review material and staff costs regularly to ensure they align with revenue growth and profitability goals.
• Build Capital Reserves: Aim to increase net current assets to provide a financial buffer against market fluctuations or unexpected expenses.
• Strategic Planning: Develop a growth plan to increase turnover while maintaining or improving profit margins.
• Diversify Client Base: Reduce concentration risk by seeking multiple clients or sectors.
• Governance & Risk Management: Consider appointing additional directors or advisors to provide broader oversight and reduce key person risk.
• Prepare for Scaling: As the business grows, consider investment in fixed assets or technology to support service delivery efficiency.

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