COMPLEMENTARY THINKING LTD

Executive Summary

Complementary Thinking Ltd is currently experiencing financial distress marked by negative net assets and insufficient liquidity, relying heavily on the director’s financial support. Immediate cash flow management and capital injection are critical to stabilizing the business. Without intervention, the risk of insolvency increases, but with targeted actions, recovery and growth remain possible.

COMPLEMENTARY THINKING LTD - Analysis Report

Company Number: 13989768

Analysis Date: 2025-07-20 19:15 UTC

Financial Health Assessment for COMPLEMENTARY THINKING LTD

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1. Financial Health Score: D

Explanation:
The company exhibits significant signs of financial distress, with persistent negative net assets and net current liabilities worsening over the last financial year. The small scale of operations and reliance on director support further constrain resilience. The grade D reflects a weak financial position requiring urgent attention.

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2. Key Vital Signs

Metric	2024 Value	Interpretation
Fixed Assets	£305	Minimal investment in long-term assets.
Current Assets (Cash only)	£2,138	Limited liquid resources to cover short-term debts.
Current Liabilities	£3,891	Increasing short-term obligations exceeding current assets.
Net Current Assets (Working Capital)	-£1,753	Negative working capital signals liquidity strain.
Net Assets (Shareholders’ Funds)	-£1,448	Negative equity indicates accumulated losses exceeding capital.
Number of Employees	1	Very small scale, limited capacity to generate revenue.
Going Concern Statement	Dependent on director support	Reliance on external financial support is a red flag.

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3. Diagnosis

Symptoms Analysis:

• Liquidity Distress: The company’s cash and current assets are insufficient to cover current liabilities, resulting in a working capital deficit of £1,753. This is a critical symptom of liquidity strain, akin to an organism struggling to maintain blood flow.
• Balance Sheet Weakness: Negative net assets (-£1,448) reflect accumulated losses, indicating the business has consumed more resources than it has generated. This is a chronic condition that weakens financial vitality.
• Operational Scale: With only one employee (the director), the business operates on a micro scale, which limits revenue generation and scalability.
• Dependency on Director: The going concern note reveals the company’s survival depends on continued financial support from the director, suggesting insufficient internal cash generation — a symptom of fragile financial health.
• Recent Trends: Deterioration from marginal negative net assets in 2023 (-£7) to a more substantial deficit in 2024 (-£1,448) shows worsening financial condition rather than recovery.

Overall Diagnosis:
Complementary Thinking Ltd is currently in a state of financial weakness characterized by liquidity shortages and eroded equity. The business is not generating sufficient internal cash flow to meet obligations and relies heavily on external support. Without corrective measures, the risk of insolvency or forced restructuring increases.

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4. Recommendations

Immediate Actions:

• Improve Cash Flow Management: Prioritize collecting receivables, reduce non-essential expenses, and manage payables carefully to improve liquidity.
• Seek Additional Capital: Consider capital injection from the director or external investors to restore positive equity and buffer liquidity.
• Review Business Model: Evaluate pricing, services offered, and cost structures to enhance profitability and cash generation.
• Monitor Financial Metrics Regularly: Establish monthly financial reviews focusing on cash flow, current liabilities, and working capital to detect early signs of distress.
• Prepare Contingency Plans: Develop plans for cost reduction or restructuring if liquidity worsens, including discussions with creditors.

Long-Term Strategies:

• Expand Revenue Base: Explore new clients, contracts, or services within educational support to increase turnover.
• Build Financial Reserves: Aim to build positive working capital and net assets over time to withstand economic fluctuations.
• Governance and Reporting: Ensure timely and transparent financial reporting to maintain stakeholder confidence and facilitate planning.

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