DIVE STUDIO LTD

Executive Summary

Dive Studio Ltd shows a sound equity base typical of a new micro-entity but faces liquidity challenges reflected in negative working capital. While solvent, the company must focus on improving cash management to ensure smooth operations and build financial resilience. With prudent oversight and strategic growth, Dive Studio Ltd can strengthen its financial health over time.

DIVE STUDIO LTD - Analysis Report

Company Number: 14596692

Analysis Date: 2025-07-29 14:02 UTC

Financial Health Assessment of Dive Studio Ltd

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1. Financial Health Score: C

Explanation:
Dive Studio Ltd exhibits foundational stability with positive net assets but shows early warning signs in working capital management. The micro-entity is in its first year of operations, which naturally limits historical financial depth. The negative net current assets suggest a liquidity challenge, but the overall positive net assets provide a buffer. With prudent management, the company can improve its financial wellness.

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2. Key Vital Signs

Metric	Value (£)	Interpretation
Fixed Assets	6,198	Modest investment in long-term assets appropriate for a new, small creative company.
Current Assets	3,140	Limited short-term assets, indicating small cash and receivables.
Current Liabilities	5,664	More short-term obligations than current assets, a liquidity concern ("symptom of distress").
Net Current Assets	-2,524	Negative working capital, meaning the company may struggle to meet short-term debts promptly.
Total Assets Less Current Liabilities	3,674	Positive overall asset position after short-term liabilities.
Net Assets (Shareholders’ Funds)	3,674	Positive equity base, reflecting initial capital and retained earnings.

Interpretation:

• The negative net current assets indicate a liquidity imbalance, akin to a patient with a weak pulse — the company may face short-term cash flow shortages.
• However, positive net assets suggest the company is solvent and has a basic cushion against liabilities, which is a good sign of underlying financial health.
• The low asset base and absence of employees align with a micro start-up stage, so limited operational scale is expected.

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3. Diagnosis

Dive Studio Ltd is in the early stages of its business lifecycle, operating as a micro private limited company engaged in artistic creation and educational support services. The company has positive net assets indicating solvency, but the negative working capital signals potential liquidity constraints — a "symptom" that could restrict day-to-day operations if not addressed.

The lack of audit requirements and minimal employee count are consistent with a micro-entity, reducing administrative burden but also limiting financial data transparency. The company is controlled fully by Mr. Hao Huang, providing clear leadership but also concentration risk.

The financials indicate the company is "stable but vulnerable" — it can cover its long-term obligations but may need to improve cash management to avoid operational stress.

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4. Recommendations

• Improve Liquidity Management:

  • Focus on accelerating receivables collection and managing payables timing to improve working capital.
  • Consider short-term financing options (e.g., overdraft or credit line) as a safety net for cash flow gaps.

• Monitor Cash Flow Closely:

  • Implement detailed cash flow forecasting to anticipate liquidity needs and avoid surprises.
  • Keep a buffer of liquid assets to maintain a "healthy cash flow pulse."

• Build Reserves Gradually:

  • Retain earnings to strengthen equity base and provide more financial resilience.
  • Avoid unnecessary fixed asset expenditure until liquidity improves.

• Diversify Income Streams:

  • Explore new projects or clients in related artistic and educational sectors to increase revenues and stabilize cash inflows.

• Maintain Compliance and Reporting:

  • Continue timely filings to avoid penalties and maintain good standing with Companies House.

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