COMPASS LONDON LTD

Executive Summary

COMPASS LONDON LTD shows signs of an early-stage, micro-entity consultancy with positive but tight working capital and very low equity. While current liabilities are manageable short-term, significant long-term debts pose a risk to financial stability. Strengthening equity and managing debt carefully will be crucial to ensure sustainable growth and financial wellness.

COMPASS LONDON LTD - Analysis Report

Company Number: 14470299

Analysis Date: 2025-07-29 15:04 UTC

Financial Health Assessment of COMPASS LONDON LTD as at 30 November 2023

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1. Financial Health Score: C

Explanation:
The company demonstrates a basic level of financial stability with positive net current assets and a positive equity position, but the overall net assets are very low (£277), indicating a fragile financial cushion. The presence of long-term liabilities comparable to total assets suggests some financial strain. Given the company is newly incorporated (Nov 2022) and categorized as a micro-entity, this score reflects an early-stage business with limited financial buffers and modest asset base.

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2. Key Vital Signs

Metric	Value (£)	Interpretation
Fixed Assets	1,378	Minimal investment in long-term assets; typical for a consultancy start-up.
Current Assets	9,207	Includes cash or receivables; relatively low but sufficient to cover short-term obligations.
Current Liabilities	8,023	Debts due within one year; quite close to current assets, indicating tight working capital.
Net Current Assets	1,184	Positive working capital, a "healthy cash flow pulse" indicating ability to meet short-term debts.
Creditors due after one year	2,285	Long-term liabilities significant relative to total assets; potential financial strain "symptom".
Net Assets	277	Very low equity base, signaling limited financial resilience or "thin financial bloodline".
Shareholders Funds	277	Equal to net assets, fully funded by shareholder equity, no external equity buffer.
Employees	0	No staff employed, consistent with a consultancy possibly run by the owner-director only.

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3. Diagnosis

• Liquidity and Working Capital:
  The company shows positive net current assets (£1,184), indicating it can cover short-term debts—a sign of "healthy cash flow" and operational liquidity. However, the margin is tight, suggesting limited buffer against unforeseen expenses or delays in receivables.

• Leverage and Solvency:
  The existence of non-current liabilities of £2,285 exceeding net assets poses a "symptom of financial distress" or at least vulnerability. This long-term debt could pressure future cash flows and reduce financial flexibility if not managed carefully.

• Capital Structure and Equity:
  With net assets and shareholder funds at only £277, the company is operating with minimal equity "capital bloodline." This could hamper the ability to absorb losses or invest in growth without additional funding.

• Operational Stage:
  No employees and very modest fixed assets suggest the business is in early development or a sole consultancy phase. This aligns with the company’s recent incorporation and micro-entity classification.

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4. Recommendations

• Strengthen Equity Base:
  Consider injecting additional equity or retained earnings to build a stronger financial cushion. This will improve solvency and resilience against operational shocks.

• Manage Long-term Liabilities:
  Review terms and necessity of long-term debts. Explore refinancing or negotiating better terms to reduce burden and improve cash flow sustainability.

• Monitor Cash Flow Closely:
  Although working capital is positive, the tight margin means any delayed payments or unexpected expenses could cause liquidity problems. Implement rigorous cash flow forecasting and tight credit control.

• Plan for Growth Carefully:
  As the company has no employees currently, any plans to scale should consider the impact on working capital and ensure sufficient funding is in place to support expansion without compromising financial health.

• Regular Financial Reviews:
  Given the fragile financial position, frequent health checks are advisable to detect early symptoms of distress and take corrective actions promptly.

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