DAVENPORT SMART TECHNOLOGIES LTD

Executive Summary

Davenport Smart Technologies Ltd exhibits a stable and improving financial position with positive working capital and increasing net assets. The company is managing liquidity well but should carefully handle new long-term liabilities and focus on strengthening equity to ensure sustained financial health. With prudent management, the outlook is positive for continued operational stability and growth potential.

DAVENPORT SMART TECHNOLOGIES LTD - Analysis Report

Company Number: 14369999

Analysis Date: 2025-07-29 18:57 UTC

Financial Health Assessment for Davenport Smart Technologies Ltd

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1. Financial Health Score: B

Explanation:
Davenport Smart Technologies Ltd shows signs of improving financial health with positive net assets and a strengthening working capital position. However, the presence of long-term liabilities and relatively modest equity base for its size temper the score. Overall, the company appears financially stable but has some vulnerabilities to manage.

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2. Key Vital Signs

Vital Sign	2024 Value	Interpretation
Fixed Assets	£21,300	Indicates investment in long-term equipment/fixed resources, growing from prior year (£13,399) – healthy growth.
Current Assets	£21,347	Cash, receivables, and stock level showing significant increase, suggesting improved liquidity.
Current Liabilities	£7,867	Reduction from previous year (£13,641), easing short-term debt pressure.
Net Current Assets	£13,480	Positive working capital (current assets exceed current liabilities) – a vital sign of liquidity and operational health.
Creditors Due After 1 Year	£25,000	Long-term liabilities have appeared this year, representing loans or deferred payments that must be monitored.
Net Assets (Equity)	£9,780	Positive net worth, increased slightly from £8,923. Reflects retained earnings and shareholder investment.
Average Number of Employees	1	Micro-entity scale with minimal staff, limiting operational complexity and overhead.

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3. Diagnosis: Financial Condition

• Liquidity and Working Capital:
  The company’s current assets comfortably cover its short-term liabilities, showing a "healthy cash flow" symptom. The transition from negative to positive net current assets from 2023 to 2024 indicates improved operational liquidity and an ability to meet immediate financial obligations without distress.

• Leverage and Long-Term Obligations:
  The introduction of £25,000 creditors due after one year (long-term liabilities) could signal new financing or deferred expenses. While this is common, these liabilities require careful management to avoid future distress symptoms such as cash flow strain.

• Profitability and Equity:
  The slight increase in net assets and shareholders’ funds reflects retained earnings or capital injections, which is a positive sign. However, the relatively low equity base implies limited financial buffer against adverse events or losses.

• Scale and Operational Model:
  Operating as a micro-entity with only one employee (likely the director), the company has a streamlined structure, which reduces overheads but may limit scalability unless investment or hiring occurs.

• Overall:
  The company is showing improving financial "vital signs" with no apparent acute distress symptoms. However, the presence of long-term debts and limited equity suggests a need for prudent financial planning to maintain health.

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4. Recommendations

• Manage Long-Term Liabilities Prudently:
  Ensure that the £25,000 long-term creditors are structured with manageable repayment terms. Avoid over-leveraging that could impair future liquidity.

• Maintain Positive Working Capital:
  Continue to monitor current assets and liabilities to preserve the positive net current assets position. Healthy liquidity is crucial, especially for a small company with limited financial reserves.

• Build Equity and Reserves:
  Consider strategies to boost retained earnings, such as improving profitability or injecting additional capital. This will strengthen the financial buffer against market fluctuations or unexpected costs.

• Plan for Growth and Scaling:
  Evaluate opportunities for expanding the workforce or investing in operational capacity if growth is targeted. However, balance this with maintaining financial stability.

• Regular Financial Monitoring:
  Implement regular internal reviews of financial statements and cash flow projections to detect early symptoms of financial stress and take corrective action promptly.

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