CUMULUS STACK LTD

Executive Summary

Cumulus Stack Ltd is financially stable with a strong liquidity position and positive equity, reflecting healthy short-term financial "vital signs." However, slight declines in current assets and limited disclosure on profitability suggest the need for vigilant cash flow monitoring and internal financial review. With prudent management and targeted growth strategies, the company is well-positioned to maintain and improve its financial wellness.

CUMULUS STACK LTD - Analysis Report

Company Number: 13967320

Analysis Date: 2025-07-20 13:51 UTC

Financial Health Assessment for CUMULUS STACK LTD as of 31 March 2024

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1. Financial Health Score: B

Explanation:
CUMULUS STACK LTD demonstrates a solid financial base with positive net assets and a strong working capital position, indicating healthy short-term liquidity and sound equity backing. However, the slight decrease in net assets and current assets compared to prior years suggests early signs of cautious spending or reduced cash reserves that should be monitored. Given the company’s micro-entity status and recent incorporation, the financial health is generally good but with room for improvement in asset growth and operational robustness.

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2. Key Vital Signs

Metric	2024 Value	Interpretation
Current Assets	£12,721	Represents liquid resources; slight decline from £18,606 (2023).
Current Liabilities	£325	Very low short-term debts; strong liquidity buffer.
Net Current Assets	£12,396	Positive and strong working capital ("healthy cash flow cushion").
Net Assets (Equity)	£12,396	Positive equity indicates the company owns more than it owes.
Shareholders' Funds	£12,396	Entirely funded by equity; no indication of debt reliance.
Number of Employees	0	Operates with minimal or no staff; likely founder-led.
Account Category	Micro	Minimal filing requirements; small scale operations.

Interpretation of Vital Signs:

• The net current assets being significantly positive is a vital sign akin to a patient’s strong pulse: it signals liquidity and ability to meet short-term obligations without distress.
• The equity base is stable but shows a slight dip from £14,047 in prior years to £12,396, which may indicate some cash outflows or investments not yet generating returns.
• Very low current liabilities are an encouraging sign, showing prudent management of payables and no obvious symptoms of financial strain.
• Operating as a micro-entity with minimal staff implies a lean business model, which can be both strength (low overhead) and a risk (limited capacity).

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3. Diagnosis: Financial Condition Assessment

Overall Condition:
Cumulus Stack Ltd displays the financial characteristics of a young, micro-sized IT consultancy with a solid equity cushion and strong liquidity. It is in a stable condition without signs of financial distress or over-leverage. The company's balance sheet is "healthy" with more assets than liabilities, and a clean short-term financial position.

Symptoms Observed:

• A slight reduction in current assets and net assets over the last year could be an early symptom of either reinvestment in the business, a temporary cash flow dip, or increased costs. This is not yet alarming but warrants monitoring.
• No audit requirement and use of micro-entity provisions suggest a simple financial structure, which can limit insight into profitability and cash flow dynamics since the profit and loss account is not filed. This is like a patient with good vital signs but without a full diagnostic report on internal organ function.

Key Risk Factors:

• Limited financial disclosure (no P&L), so profitability and operational cash flow health remain unclear.
• Dependence on a single director and likely sole shareholder (Mr. Alastair Fensome) means business continuity depends heavily on this individual.
• Small asset base and minimal liabilities mean vulnerability to unexpected expenses or market changes.

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4. Recommendations: Steps to Improve Financial Wellness

Short-Term:

• Maintain and monitor cash reserves closely to avoid liquidity "stress". Consider keeping a cash buffer to mitigate any unexpected operational expenses.
• Prepare and review internal profit and loss statements regularly, even if not legally required, to gain insight into operational performance and identify cost control or revenue growth opportunities.
• Consider incremental diversification of income streams or client base to reduce dependency risks.

Medium-Term:

• Explore modest growth strategies to rebuild and increase current assets and equity, such as investing in scalable IT solutions or marketing to attract new clients.
• Formalise financial controls and forecasting to anticipate and manage future cash flow needs, akin to regular health check-ups to prevent financial decline.
• If hiring is planned, ensure that staffing increases do not outpace revenue growth, to maintain lean operational health.

Governance:

• Continue ensuring compliance with filing deadlines to avoid penalties ("avoid financial infections").
• Document succession planning and risk management strategies around the key person risk given the company’s structure.

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