CWG CONSULTING LTD

Executive Summary

CWG Consulting Ltd is financially stable with positive working capital and equity but shows early symptoms of financial strain, including declining net assets and reliance on director loans. The company should focus on improving cash flow management, profitability, and diversifying its capital structure to enhance financial resilience and support sustainable growth.

CWG CONSULTING LTD - Analysis Report

Company Number: 13976380

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

Financial Health Assessment for CWG CONSULTING LTD

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1. Financial Health Score: C

Explanation:
CWG Consulting Ltd demonstrates basic financial stability typical for a micro-entity in its early years, with positive net current assets and shareholders’ funds. However, there is a mild decline in net current assets and shareholder funds year-over-year, and the company has director's loan balances which may indicate cash flow pressures or reliance on insider funding. These factors suggest moderate financial health but some symptoms of stress that need monitoring.

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2. Key Vital Signs

Metric	31-Mar-2024	31-Mar-2023	Interpretation
Current Assets	£30,782	£37,980	Healthy short-term asset base but slightly decreasing
Current Liabilities	£14,916	£18,340	Liabilities have decreased, easing short-term obligations
Net Current Assets (Working Capital)	£15,866	£19,640	Positive working capital indicates ability to meet short-term debts, though declining
Shareholders’ Funds (Equity)	£15,866	£19,640	Equity decreased, signaling either losses or withdrawals
Director’s Loan Account (Liability)	£14,917 (owed to director)	£13,511	Reliance on director’s funding rather than external financing

Interpretation of Vital Signs:

• Working Capital: The company maintains a positive working capital—a "healthy pulse" indicating it can cover short-term obligations. However, the decline from last year is a mild symptom of potential liquidity tightening.
• Shareholders' Equity: A decrease in equity suggests the company might have incurred losses or distributed capital, which could be a symptom of operational challenges or strategic investment.
• Director’s Loan: The notable balance owed to the director indicates that the company depends on internal funding. While not uncommon in small private companies, this is a sign of potential cash flow constraints or insufficient external financing.

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3. Diagnosis

CWG Consulting Ltd is in a stable but cautiously vulnerable financial condition. The company is young (incorporated in 2022), operating within the micro-entity accounting framework, which limits the complexity of its reported data but also constrains detailed insight.

• The positive working capital and shareholders’ funds act like a steady heartbeat, showing the company is solvent and able to meet its immediate liabilities.
• The reduction in net current assets and equity is a mild symptom of financial strain—possibly due to operational costs, investments, or limited profitability.
• The director’s loan account reveals a dependency on insider capital, which may mask underlying cash flow challenges if external financing or revenue generation is insufficient. This is akin to a patient relying on medication to maintain stability rather than natural health.
• The absence of employees in the latest year may indicate a lean operational model or outsourcing, which reduces fixed costs but may limit growth capacity.

In summary, CWG Consulting Ltd is financially stable but shows symptoms requiring monitoring: declining equity and reliance on director loans. These may point to early-stage business development challenges or short-term liquidity pressures.

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4. Recommendations

To improve financial wellness and strengthen the company’s financial health, the following are advised:

1. Cash Flow Management:
   Implement rigorous cash flow forecasting to anticipate liquidity needs and reduce reliance on director loans. Healthy cash flow is the lifeblood of the business.

2. Profitability Enhancement:
   Review pricing, cost structures, and operational efficiency to improve margins and retain earnings, bolstering shareholders’ funds.

3. Capital Structure Review:
   Explore external funding options (e.g., small business loans, investor capital) to reduce dependence on director advances and diversify financing sources.

4. Regular Financial Monitoring:
   Establish monthly financial reviews to detect early symptoms of distress (e.g., declining working capital, rising liabilities).

5. Strategic Growth Planning:
   Consider ways to grow the business sustainably, such as expanding client base or service offerings, while maintaining a healthy balance sheet.

6. Compliance and Reporting:
   Continue timely filing to maintain good standing and transparency; consider voluntary audit or detailed financial reviews as the company grows for deeper insights.

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