Company Number: 12622432

Analysis Date: 2025-07-29 15:23 UTC

Financial Health Assessment: CLEARANCEOPS LTD (As at 31 May 2024)

---

1. Financial Health Score: D

Explanation:
The company’s financial condition shows signs of distress reflected by deteriorating net assets, a significant drop in cash reserves, and negative working capital. While not insolvent, the “vital signs” indicate a compromised financial state requiring urgent attention.

---

2. Key Vital Signs

Metric	2024 Value (£)	2023 Value (£)	Interpretation
Net Assets / Shareholders’ Funds	-1,134	2,022	Net assets flipped from positive to negative – a “symptom of financial distress,” indicating liabilities exceed assets.
Cash at Bank and in Hand	631	2,853	Cash reserves have dropped drastically (~78%), signaling “poor liquidity” and potential cash flow problems.
Current Liabilities	4,807	4,634	Current liabilities remain high and slightly increased, putting pressure on short-term obligations.
Net Current Assets (Working Capital)	-4,176	-1,781	Negative working capital worsened significantly, a “warning sign” that current liabilities exceed current assets by a large margin.
Fixed Assets (Plant & Machinery)	3,042	3,803	Slight reduction in fixed assets, reflecting depreciation but no new capital investment, possibly indicating limited reinvestment.
Profit / Loss for the Year	-3,156	+394	Shift from profit to a substantial loss, indicating operational challenges and reduced profitability.
Number of Employees	2	2	Small workforce consistent, indicating a micro-sized operation.

---

3. Diagnosis: What the Financial Data Reveals

CLEARANCEOPS LTD is showing clear symptoms of financial strain as of the 2024 year-end:

• Negative Net Assets: The company’s liabilities have overtaken assets, indicating a balance sheet in the “red zone.” This is akin to a patient whose vital organ function has deteriorated—an urgent red flag.
• Worsening Liquidity: Cash on hand has fallen sharply, impairing the company’s ability to meet immediate expenses, a “weak pulse” for its cash flow health.
• Negative and Declining Working Capital: The significant negative working capital signals that short-term debts exceed short-term assets by a substantial margin, risking operational disruption if not addressed promptly.
• Operating Loss: The swing from a modest profit to a loss of £3,156 shows operational challenges, possibly reduced revenue or increased costs, indicating the company’s “energy levels” are low.
• No Significant Capital Investment: Fixed assets have declined slightly due to depreciation without reinvestment, suggesting limited capacity or appetite to grow or upgrade assets.

Overall, the company’s financial health resembles a patient in need of immediate intervention to stabilize and restore vitality.

---

4. Recommendations: Specific Actions to Improve Financial Wellness

1. Immediate Cash Flow Management:

   • Tighten credit control to accelerate receivables.
   • Review and possibly renegotiate payables to extend payment terms.
   • Explore short-term financing options (e.g., overdraft, invoice financing) to maintain liquidity.

2. Cost Control and Profitability Improvement:

   • Conduct a detailed cost review to identify and eliminate non-essential expenses.
   • Consider operational efficiency improvements to reduce waste and overheads.
   • Explore pricing strategy adjustments or new revenue streams.

3. Working Capital Optimization:

   • Manage inventory and receivables more actively to improve current assets.
   • Engage with creditors to manage liabilities better and avoid penalties.

4. Balance Sheet Strengthening:

   • Consider capital injection from existing shareholders or new investors to restore net asset positive territory.
   • Explore restructuring options if debts are unsustainable.

5. Strategic Review:

   • Directors should undertake a comprehensive review of business model viability in the current market environment.
   • Seek professional financial and operational advice to develop a turnaround plan.

---

Medical Analogy Summary

CLEARANCEOPS LTD’s financial health is akin to a patient whose vital signs have deteriorated: the “heart” of the business (net assets) is weak, “blood flow” (cash flow) is reduced, and the “immune system” (working capital) is compromised. Without timely intervention, the risk of “financial collapse” increases. However, with focused treatment—improving liquidity, controlling costs, and restoring capital—the company can recover and regain financial wellness.

---