DISTINCT GRAPHICS LIMITED

Executive Summary

Distinct Graphics Limited shows symptoms of financial strain with negative working capital and sharply reduced net assets, indicating liquidity stress and capital erosion. While the company remains operational, immediate actions to improve cash flow, control costs, and possibly inject additional capital are recommended to restore financial health and ensure sustainability.

DISTINCT GRAPHICS LIMITED - Analysis Report

Company Number: 13480828

Analysis Date: 2025-07-29 17:29 UTC

Financial Health Assessment for DISTINCT GRAPHICS LIMITED (as of 30 June 2024)

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1. Financial Health Score: C

Explanation:
The company exhibits signs of financial strain, particularly a deterioration in working capital and net assets compared to previous years. While it remains operational and solvent by a narrow margin, the negative net current assets and significant drop in net assets portray symptoms of financial distress. The score "C" reflects a borderline condition that requires monitoring and corrective actions to prevent further decline.

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2. Key Vital Signs

Metric	2024 Value (£)	Interpretation
Fixed Assets	656	Minimal long-term investment, consistent with a small design business.
Current Assets	5,022	Reduced from prior years, indicating shrinking short-term resources.
Cash at Bank	1,890	Modest cash reserves, improved from prior year but still limited liquidity.
Debtors	3,132	Significantly declined, could reflect reduced sales or aggressive debt collection.
Current Liabilities	5,443	High relative to current assets; immediate obligations surpass liquid resources.
Net Current Assets (Working Capital)	-421	Negative working capital is a critical symptom of liquidity strain — potential cash flow issues.
Total Assets Less Current Liabilities	235	Very slim buffer to cover liabilities after current debts; financial health is fragile.
Net Assets / Shareholders' Funds	235	Sharply declined from £1,381 in 2023, indicating erosion of retained earnings or capital base.
Share Capital	10	Nominal amount, typical for a small private company.
Profit and Loss Reserve	225	Very low accumulated profits, suggesting recent losses or distributions.
Director Advances/Loans	75	Small outstanding director loan balance, likely manageable.
Staff Costs (Annual)	£10,896	Consistent payroll expense for one employee, indicating a small operation.

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3. Diagnosis: Financial Condition Overview

The company is like a patient showing signs of fatigue and liquidity stress. The most concerning symptom is the negative working capital (-£421), meaning current liabilities exceed current assets, which can lead to difficulties in meeting short-term obligations promptly. This is a typical "symptom of distress" that can constrain daily operations and supplier relationships.

Net assets have shrunk drastically from £8,033 at inception (2021) to just £235 in 2024, indicating the business is consuming its initial capital and retained earnings without sufficient replenishment. This could stem from operating losses, increased costs, or a decline in sales revenue—though turnover figures are not disclosed here.

Cash reserves have somewhat improved year-on-year (£1,890 vs. £865), which is a positive sign of some cash inflow or improved cash management. However, cash alone is insufficient to cover current liabilities, reflecting potential "cash flow fragility."

Debtors have decreased substantially, potentially reflecting better credit control or less sales on credit, but could also indicate shrinking business volume.

The company operates in a niche (specialised design activities) and maintains a very lean cost base with one employee and modest fixed assets, which helps control overheads but also limits scale.

Overall, there are clear warning signs that without intervention, the company may face liquidity crises or capital depletion.

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4. Recommendations: Actions to Improve Financial Wellness

• Strengthen Working Capital:

  • Improve cash management by accelerating debtor collections and negotiating extended payment terms with suppliers.
  • Consider short-term financing options (overdraft or invoice financing) to cover immediate liabilities and smooth cash flow.

• Review Profitability:

  • Conduct a thorough review of pricing, cost structure, and revenue streams.
  • Identify opportunities to increase sales or diversify services to improve gross margins.

• Cost Control:

  • Maintain tight control on payroll and overhead expenses.
  • Explore automation or outsourcing to reduce fixed costs.

• Capital Injection:

  • Explore additional capital contributions from shareholders or external investors to bolster the equity base and restore financial health.

• Financial Monitoring:

  • Implement regular financial health checks and cash flow forecasting to detect early warning signs of distress.
  • Engage with an accountant or financial advisor to develop a turnaround plan if necessary.

• Director Engagement:

  • Directors should monitor advances and loans to the company carefully to avoid further stress on cash resources.

By addressing these areas, the company can stabilize its "financial heartbeat," restore liquidity, and build a stronger foundation for future growth.

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