CORELAIN LTD

Executive Summary

CORELAIN LTD exhibits strong working capital and steady net asset growth, reflecting overall good financial health. However, reliance on high debtor balances and increased long-term liabilities signal areas for cautious liquidity management. Enhancing cash reserves, tightening credit controls, and managing debt will support a robust financial future for this growing consultancy.

CORELAIN LTD - Analysis Report

Company Number: 14451716

Analysis Date: 2025-07-29 12:02 UTC

Financial Health Assessment for CORELAIN LTD as of 31 October 2024

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1. Financial Health Score: B

Explanation:
CORELAIN LTD demonstrates a solid financial foundation with strong net current assets and positive net assets growth over the past two years. The company maintains a healthy working capital position and has no overdue filings, indicating good compliance and operational discipline. However, the presence of significant long-term liabilities and a relatively modest cash reserve compared to debt levels indicates some caution in liquidity management, preventing an 'A' grade.

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2. Key Vital Signs

Metric	2024 Value (£)	Interpretation
Fixed Assets	21,684	Small but growing asset base, mainly tangible assets; indicates investment in operational capacity.
Current Assets	1,305,920	Strong short-term assets, largely composed of debtors (clients owing money).
Cash at Bank	55,023	Cash reserve is positive but modest relative to short-term liabilities; could be higher for liquidity.
Current Liabilities	335,031	Short-term debts and obligations; manageable given current assets.
Net Current Assets	970,889	Very healthy working capital (Current Assets - Current Liabilities) indicating good short-term health.
Creditors due after 1 year	481,482	Significant long-term liabilities, potentially loans or deferred payments; needs monitoring.
Net Assets / Shareholders Funds	511,091	Positive equity showing the company’s value exceeds liabilities; growing steadily year-on-year.
Debtors	1,250,897	High debtor balance reflects ongoing business but requires monitoring for timely collection.
Average Employees	22	Moderate workforce size for a consultancy, indicating operational scale.

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3. Diagnosis: Financial Health Review

• Healthy Cash Flow Indicators:
  The company's net current assets (working capital) are robust (£970,889), meaning it has ample current assets to cover short-term liabilities. This is a vital sign of liquidity health and operational smoothness.

• Debtor Concentration:
  A large proportion of current assets are debtors (£1,250,897), which suggests the company is extending significant credit to clients. While this can be normal in consultancy, it poses a symptom of potential cash flow risk if collections slow down. Timely collection processes are critical.

• Long-Term Debt Burden:
  Creditors due beyond one year have increased significantly to £481,482 compared to £168,001 in the previous year. This reflects higher long-term obligations, which may be loans or deferred payments that could strain future cash flows if not managed prudently.

• Asset Base and Equity Growth:
  Fixed assets are relatively small but have increased, showing investment in operational assets. Net assets have grown steadily from £483,373 to £511,091, indicating profitable retention and value creation.

• Profit and Loss Account:
  A positive retained earnings balance (£27,718) signals the company is generating profit and retaining value, although the abridged accounts limit detailed profitability analysis.

• Going Concern and Support:
  The director confirms a reasonable expectation of continued operations with shareholder support available if required, which is reassuring for the company’s financial future.

• Compliance and Governance:
  No overdue filings or compliance issues, with a single director holding full control and ownership, indicating straightforward governance but also concentration of control risk.

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4. Recommendations: Improving Financial Wellness

• Enhance Cash Reserves:
  With cash at £55,023, increasing cash reserves would improve the company's liquidity buffer to better handle unexpected expenses or slower debtor payments.

• Strengthen Debtor Management:
  Implement tighter credit control policies to reduce debtor days and improve cash inflows. Regular monitoring and follow-up on overdue accounts will reduce liquidity risk.

• Manage Long-Term Liabilities:
  Review the structure and terms of long-term creditors to ensure that debt servicing is sustainable. Consider refinancing options or negotiating payment terms to reduce pressure on future cash flows.

• Diversify Governance:
  Consider appointing additional directors or advisors to reduce concentration risk and add strategic oversight, which can improve decision-making and investor confidence.

• Profitability Monitoring:
  Even though the accounts are abridged, establishing detailed internal profit tracking and forecasting will help identify areas for cost control and margin improvement.

• Plan for Growth:
  Given the company operates in management consultancy for construction and real estate sectors, closely monitor market trends and client demand to align resources efficiently.

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Executive Summary