D M AUTOMATION LTD

Executive Summary

D M AUTOMATION LTD, a newly formed micro-entity, currently shows a modest but stable financial position with positive equity but a slight working capital deficit indicating potential short-term liquidity strain. While not critical, this symptom calls for careful cash flow management and expense control. Proactive financial monitoring and possible capital support will be key to maintaining healthy operations and supporting growth.

D M AUTOMATION LTD - Analysis Report

Company Number: 14761947

Analysis Date: 2025-07-20 18:26 UTC

Financial Health Assessment: D M AUTOMATION LTD (as at 31 March 2024)

---

1. Financial Health Score: C

Explanation:
D M AUTOMATION LTD, a micro-entity in its first full financial year, shows a modest financial position with shareholders’ funds of £5,555. However, the company is exhibiting early symptoms of financial stress, notably a negative net current asset position (working capital deficit) of £441. Given its startup phase and small size, this is not uncommon, but it places the company at a cautious "C" rating—adequate but with clear warning signs that require attention.

---

2. Key Vital Signs

Metric	Value (£)	Interpretation
Fixed Assets	5,996	Small investment in long-term assets, typical for a young business.
Current Assets	40,436	Cash, receivables, or stock ready to be converted into cash. Healthy level for operations.
Current Liabilities	40,877	Short-term obligations slightly exceeding current assets. This is a warning sign.
Net Current Assets (Working Capital)	-441	Negative working capital indicates potential liquidity strain.
Total Assets Less Current Liabilities	5,555	Net asset value, positive but modest.
Shareholders Funds	5,555	Equity capital representing owner’s stake, equal to net assets here.

Interpretation:

• Healthy Cash Flow Indicator: Current assets close to current liabilities show the company has resources to meet short-term debts, but a slight shortfall warns of liquidity tightness.
• Symptoms of Distress: Negative working capital (-£441) is a symptom of potential cash flow difficulties; the company may struggle to cover immediate obligations without raising new capital or improving collections.
• Stability Indicator: Positive net assets and shareholders’ funds suggest no accumulated losses so far but the company is still in its infancy.

---

3. Diagnosis

D M AUTOMATION LTD is in the early stages of development, reflected by minimal fixed assets and a small workforce (average 1 employee). The financial "vitals" reveal a borderline liquidity issue—negative working capital—which, while not critical yet, signals that the company should monitor cash flows closely. The total equity is positive, indicating no erosion of capital or accumulated losses, which is a good sign of financial stability at this stage.

Being a micro-entity incorporated in 2023, the business is likely still investing in establishing operations and revenue streams. The slight current asset deficit is a common symptom in startups due to timing differences between cash inflows and outflows.

---

4. Recommendations

• Improve Liquidity: Implement tighter controls on receivables collection and manage payables to avoid cash shortages. Negotiating better payment terms with suppliers or accelerating customer payments can ease short-term pressure.
• Cash Flow Forecasting: Regularly prepare cash flow forecasts to anticipate potential shortages and plan financing needs proactively.
• Capital Injection: Consider a capital injection or short-term financing if working capital issues become more pronounced. This will strengthen the balance sheet and support growth.
• Expense Management: Monitor and control operating expenses carefully to avoid eroding limited working capital.
• Financial Monitoring: Establish routine financial health checks focusing on liquidity ratios and cash conversion cycles to catch early warning signs.
• Business Development: Focus on increasing revenue streams to build cash reserves and improve net current asset position.

---

Medical Analogy Summary

Think of D M AUTOMATION LTD as a young patient in its startup phase: the vital signs show the heart (equity) is beating steadily, but the pulse (liquidity) is a bit weak—just a slight shortfall in cash to cover immediate bills. This is common in newborn companies but requires attentive care to avoid worsening symptoms. With proper management and a bit of financial "nutrition," the company can stabilize and grow stronger.

---