Company Number: 13313248

Analysis Date: 2025-07-29 14:23 UTC

Financial Health Assessment for CMH DESIGNS LIMITED

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1. Financial Health Score: B

Explanation:
CMH DESIGNS LIMITED shows a generally solid financial position with strong liquidity and positive net assets. However, there is a notable decline in net assets and current assets over the latest year, which signals emerging symptoms of financial stress that warrant monitoring. The company’s financial structure is sound but warrants cautious observation and proactive management to maintain health.

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2. Key Vital Signs (Core Financial Metrics):

Metric	Latest (2025)	Previous (2024)	Interpretation
Net Assets (Equity)	£34,899	£51,883	Positive but declined by ~33%, indicating erosion of equity.
Current Assets	£35,820	£72,170	Sharp decrease (~50%) suggests reduced short-term resources.
Cash & Cash Equivalents	£35,812	£63,324	Cash reserves halved, a critical sign of tightening liquidity.
Current Liabilities	£921	£20,587	Dramatic reduction, improving short-term obligations coverage.
Net Current Assets (Working Capital)	£34,899	£51,583	Positive working capital but decreased, indicating less buffer for operational needs.
Fixed Assets	£0	£300	Fully depreciated or disposed of assets; no long-term capital assets currently.
Share Capital	£2	£2	Minimal share capital, typical for micro/small companies.
Average Number of Employees	1	1	Very small workforce, limiting operational scale.

Interpretation:
The company maintains a healthy liquidity position with net current assets comfortably covering current liabilities, which suggests a "healthy cash flow" status. However, the sharp drop in cash and current assets signals potential "symptoms of distress" like reduced operational cash inflows or higher outflows. The drastic fall in current liabilities could indicate settlement of debts or reclassification, but the net effect is a more conservative liability profile.

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3. Diagnosis (Overall Financial Condition):

• Liquidity and Solvency:
  The company demonstrates strong liquidity as current assets significantly exceed current liabilities, and net assets remain positive. This implies good solvency and ability to meet short-term obligations without distress.

• Asset Base:
  The absence of fixed assets at the latest year end suggests the business relies on minimal capital investment or has fully depreciated its equipment. This aligns with an engineering design activity company that may be service and knowledge-based rather than asset-heavy.

• Earnings Capacity:
  There is no income statement provided, but the decline in net assets and cash reserves may suggest a reduction in profitability or cash generation capability. This could be a sign of operational challenges or investment in non-capital expenditures.

• Capital Structure:
  The company has minimal share capital but accumulated reserves (retained earnings) represent the bulk of shareholder equity, indicating business growth funded internally rather than externally.

• Risk Factors:
  The significant drop in cash and current assets may be a "symptom of distress" and warrants investigation into cash flow timing, receivables collections, and operational expenses. The company must ensure it does not fall into a liquidity crunch.

• Governance and Control:
  Two individuals hold significant control with nearly equal share and voting rights, which may promote stable governance but also concentrates decision-making risk.

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4. Recommendations (Actions to Improve Financial Wellness):

1. Improve Cash Flow Management:

   • Closely monitor cash inflows and outflows to prevent liquidity shortfalls.
   • Consider short-term financing options or credit lines as a contingency.

2. Strengthen Revenue Streams:

   • Evaluate client contracts and project pipelines to enhance cash generation.
   • Explore diversifying services to reduce dependence on a narrow client base.

3. Cost Control:

   • Review operational expenses and overheads to prevent erosion of reserves.
   • Maintain a lean structure given the micro-sized workforce.

4. Asset Investment:

   • Plan for targeted investment in essential equipment or technology to support efficiency and growth.

5. Financial Reporting and Analysis:

   • Prepare and review income statements regularly to identify profitability trends.
   • Perform monthly cash flow forecasts to detect early signs of distress.

6. Governance:

   • Maintain clear communication and strategic alignment between controlling shareholders for stable decision-making.

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Medical Analogy Summary:

CMH DESIGNS LIMITED currently exhibits a healthy cardiovascular system—strong liquidity and positive net assets act like a healthy heartbeat and good circulation, sustaining business operations. However, the recent drop in cash reserves and net assets are warning symptoms akin to early signs of fatigue or reduced stamina. Proactive financial "check-ups" and management are needed to prevent deterioration and ensure robust health moving forward.

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