Company Number: 13229605

Analysis Date: 2025-07-20 18:55 UTC

Financial Health Assessment for CLEENS SNEAKERS LTD (Year ended 29 February 2024)

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1. Financial Health Score: B

Explanation:
CLEENS SNEAKERS LTD demonstrates a strong improvement in key financial metrics over the last two years, indicating a healthy financial condition. The company shows robust liquidity and a solid equity base but has some areas to monitor, such as relatively high current liabilities and concentration of cash. These factors together result in a "B" grade — good financial health with room for improvement.

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2. Key Vital Signs:

Metric	2024 Value	Interpretation
Current Assets	£1,574,737	Strong asset base, mainly cash and inventory.
Cash at Bank	£607,471	Healthy cash reserves supporting liquidity and operations.
Debtors	£0	No outstanding receivables, suggests prompt collection or cash sales.
Current Liabilities	£850,622	Significant short-term obligations, needs close monitoring.
Net Current Assets (Working Capital)	£724,115	Positive working capital, indicating good short-term financial health.
Shareholders’ Funds (Equity)	£726,586	Strong equity base reflecting retained earnings growth.
Inventories	£967,266	Large stock holding, potential tie-up of funds in inventory.

Additional Context:

• The company’s working capital is positive and has grown substantially from £47,841 in 2023 to £724,115 in 2024, indicating an improved ability to cover short-term debts.
• The shareholders’ funds jumped from £51,202 in 2023 to £726,586 in 2024, mainly driven by retained earnings — a sign of profitability and reinvestment.
• Cash represents roughly 39% of current assets, which is a healthy sign of liquidity but also indicates a concentration of resources in cash rather than diversified assets.
• Current liabilities have nearly doubled, primarily including taxation and social security liabilities (£569,030), which may reflect increased profits or a tax liability buildup.

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3. Diagnosis:

CLEENS SNEAKERS LTD appears to be in a healthy financial state with strong liquidity and capital structure. The company has shown significant growth in working capital and equity, resembling a patient with a steadily improving heart rate and blood pressure after treatment. The absence of debtors suggests efficient cash flow management or a business model reliant on immediate payments, which is a positive symptom of financial wellness.

However, the company carries a high level of current liabilities, especially tax-related, which could be a symptom of accumulated tax obligations or timing issues in payments. The sizeable inventory level indicates a potential risk of overstocking or slow-moving stock, which could strain cash flow if not managed properly — akin to excess fat deposits in the bloodstream that may impede smooth circulation.

The company has minimal fixed assets, indicating an asset-light manufacturing operation or outsourcing of capital-intensive activities. The increase in employee numbers from 2 to 5 also reflects growth but requires monitoring to ensure payroll and operational costs remain sustainable.

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4. Recommendations:

• Manage Current Liabilities: Prioritize planning for the timely settlement of tax and social security liabilities to avoid penalties or cash flow strain. Consider setting aside dedicated funds or negotiating payment schedules with HMRC if needed.
• Inventory Optimization: Review inventory turnover rates to prevent excess stock build-up. Implement tighter inventory controls or demand forecasting to free up cash tied in stock.
• Cash Flow Monitoring: Maintain a strong cash reserve but look to diversify asset allocation to enhance returns, such as investing in working capital improvements or operational efficiencies.
• Profit Retention Strategy: Continue building retained earnings cautiously to strengthen equity but balance reinvestment with operational needs.
• Financial Reporting and Oversight: Although the company qualifies for small company exemptions, consider periodic internal reviews or audits to detect financial "symptoms" early and sustain health.
• Growth Management: Monitor employee costs and operational expansion carefully to avoid overextension, ensuring that growth is supported by corresponding revenue increases.

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