DATA THEOREM LTD

Executive Summary

DATA THEOREM LTD shows a stable and improving financial condition with healthy liquidity and growing equity. The company maintains a strong cash position relative to short-term liabilities, indicating good financial "vital signs." However, significant reliance on intra-group funding highlights a need to strengthen independent cash flow and diversify financing sources for sustained financial wellness.

DATA THEOREM LTD - Analysis Report

Company Number: 14141618

Analysis Date: 2025-07-29 16:39 UTC

Financial Health Assessment for DATA THEOREM LTD (as at 31 December 2024)

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1. Financial Health Score: B

Explanation:
DATA THEOREM LTD exhibits a stable and improving financial condition with positive net current assets and growing shareholders’ funds over recent years. The company maintains a healthy cash reserve relative to its short-term liabilities, which is a critical sign of liquidity strength. However, the company has a high level of short-term liabilities owed predominantly to group undertakings, indicating reliance on related party funding rather than operational cash flow, which tempers the score to a solid B rather than an A.

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2. Key Vital Signs

Metric	2024 Value (£)	Interpretation
Current Assets	134,936	Primarily cash (134,183), showing good liquidity with minimal debtor exposure (753).
Current Liabilities	121,110	Significant but covered by current assets, indicating ability to meet short-term obligations.
Net Current Assets	13,826	Positive working capital, a "healthy pulse," signaling short-term financial stability.
Shareholders' Funds	13,826	Growth from £9,532 in 2023 to £13,826 in 2024 shows retained earnings improving capital base.
Cash to Current Liabilities Ratio	1.11 (134,183/121,110)	Over 1:1 ratio is a "healthy cash flow" indicator, company can cover immediate liabilities with cash.
Debtors to Current Assets Ratio	0.56% (753/134,936)	Very low debtor balance reduces risk of bad debts or cash flow delays.

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3. Diagnosis

DATA THEOREM LTD is currently in a stable financial condition with a solid liquidity position, as the company holds most of its current assets in cash. The "symptoms" of distress such as overdue payables or negative working capital are absent. The company’s ability to pay its short-term debts on time is confirmed by cash exceeding current liabilities, which is akin to a steady heartbeat in a medical analogy.

However, a key underlying factor is the high proportion of liabilities owed to group undertakings (£114,874 out of £121,110 total current liabilities), which suggests the business depends heavily on intra-group financing rather than generating independent operational cash flow. While this is common for subsidiaries within corporate groups, it does imply potential vulnerability if group support were withdrawn.

The rise in retained earnings and shareholders’ funds indicates the company is building a stronger equity base, which is a positive sign of financial health and resilience. The small number of employees (average 2 in 2024) suggests a lean operation, likely focused on software publishing as per SIC code 58290.

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4. Recommendations

1. Diversify Funding Sources:
   Reduce reliance on intra-group loans by exploring external funding options or increasing operational revenues to strengthen independent cash flows.

2. Improve Debtor Management:
   While debtor balances are low, maintaining tight credit control will preserve liquidity and prevent cash flow interruptions.

3. Monitor Working Capital Trends:
   Keep tracking the net current assets to ensure positive working capital is sustained, acting as a buffer against unexpected expenses.

4. Operational Growth Focus:
   Given the company is a software publisher, focus on scaling operations and increasing turnover to lessen dependence on group funding and improve profitability.

5. Regular Financial Review:
   Continue timely filing of accounts and confirmation statements to avoid compliance risks and maintain transparency for stakeholders.

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