CODEVALENT LTD

Executive Summary

CODEVALENT LTD demonstrates a stable financial position with adequate liquidity and positive net assets, reflecting healthy operational cash flow. However, a decline in net assets and the emergence of current liabilities such as taxes and director loans suggest caution. Proactive cash flow management and strategic reinvestment are recommended to sustain financial wellness and support future growth.

CODEVALENT LTD - Analysis Report

Company Number: 13168626

Analysis Date: 2025-07-20 17:35 UTC

Financial Health Assessment of CODEVALENT LTD as at 31 January 2024

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1. Financial Health Score: B

Explanation:
CODEVALENT LTD shows a generally sound financial position with positive net assets and positive working capital. The business exhibits solid liquidity with cash reserves exceeding current liabilities, which is a sign of healthy cash flow management. However, there is a noticeable decline in net assets and working capital from the prior year, suggesting some emerging caution signals. The absence of fixed assets and the reliance on cash and minimal liabilities indicate a lean operation but also a potential lack of investment in long-term growth. The company is small, with no employees and a single director who also holds majority control.

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2. Key Vital Signs:

Metric	2024 (Latest)	2023	Interpretation
Cash at bank	£35,855	£40,000	Sufficient cash buffer; slight decrease
Current Liabilities	£18,156	£0	Introduction of liabilities (taxes, loans)
Net Current Assets	£17,699	£40,000	Reduced working capital but still positive
Net Assets / Shareholders' Funds	£17,698	£40,000	Decline reflects profits retained or investment changes
Fixed Assets	£0	£0	No long-term asset investment
Average Employees	0	0	No staff, indicating low overhead
Share Capital	£1.00	£1.00	Minimal equity capital

Interpretation of Vital Signs:

• The company maintains a positive working capital (Net Current Assets) which is vital for meeting short-term obligations, indicating a currently healthy liquidity position.
• The cash reserves are adequate to cover current liabilities by nearly double, suggesting no immediate liquidity stress.
• The increase in current liabilities mainly due to taxes and loans from directors points to emerging financial obligations that require close monitoring.
• The decline in net assets from £40,000 to £17,698 suggests the company may have distributed profits, incurred losses, or invested funds without corresponding asset acquisition.
• No fixed assets imply the company operates in a service or digital sector without significant capital expenditure, consistent with software development and e-commerce activities.
• Zero employees suggest a very lean or possibly owner-operated structure.

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3. Diagnosis:

CODEVALENT LTD's financial "vital signs" indicate a company currently in a stable but cautious state. The presence of healthy cash reserves relative to liabilities is a positive symptom of liquidity and operational cash flow health. However, the noticeable reduction in net assets and net current assets from the previous year acts as a symptom of possible financial strain or strategic cash outflows (such as dividends or director loans).

The company’s lack of fixed assets and employees suggests a business model reliant on intellectual property or digital services rather than physical goods or staff-intensive operations. The increase in current liabilities to include tax obligations and director loans should be treated as warning signs that require attention to prevent future cash flow stress.

Overall, the financial condition is stable but warrants monitoring especially for the impact of liabilities and cash flow management to avoid symptoms of distress such as late payments or inability to fund growth activities.

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4. Recommendations:

• Monitor Cash Flow Closely: Maintain a strong focus on liquidity to ensure the company can meet upcoming liabilities, especially tax and director loans. Consider preparing a cash flow forecast to anticipate any tight periods.
• Review Director Loans: Formalize repayment plans for director loans to avoid potential future cash flow constraints or conflicts of interest.
• Profit Retention Strategy: Evaluate opportunities to retain earnings within the business to rebuild net asset levels and strengthen the company’s financial base.
• Consider Investment in Growth: Explore strategic investment in fixed assets or human capital if growth prospects justify expansion. Even minimal investment in software tools or marketing could improve competitive positioning.
• Tax Planning: Engage with a tax advisor to optimize tax liabilities and ensure compliance, avoiding penalties or unexpected tax burdens.
• Maintain Compliance: Continue timely filing of accounts and confirmation statements to preserve regulatory compliance and stakeholder confidence.
• Prepare for Contingencies: Develop contingency plans for unexpected expenses, particularly given the recent increase in liabilities.

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