DRUMSTICK TREE LIMITED

Executive Summary

Drumstick Tree Limited shows a solid and improving financial condition with strong net assets and working capital, reflecting a healthy balance sheet typical of a recovering patient regaining strength. The main concern is the significant director advance, which should be managed to ensure liquidity remains strong. Overall, the company is financially stable and compliant but should focus on formalizing internal financial arrangements and preparing for sustainable growth.

DRUMSTICK TREE LIMITED - Analysis Report

Company Number: 12491871

Analysis Date: 2025-07-20 14:48 UTC

Financial Health Assessment for DRUMSTICK TREE LIMITED

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1. Financial Health Score: B

Explanation:
Drumstick Tree Limited exhibits strong financial fundamentals with growing net assets and a healthy working capital position. The company’s balance sheet shows positive momentum over recent years, reflecting improving financial stability. However, the small size and presence of director advances introduce moderate liquidity and governance considerations that temper the score slightly below an A.

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2. Key Vital Signs

Metric	2024 Value	Interpretation
Net Assets	£56,889	Healthy growth from £28,547 in 2023; positive equity base indicates solvency.
Net Current Assets (Working Capital)	£47,452	Strong positive working capital, showing good short-term liquidity ("healthy cash flow").
Fixed Assets	£9,437	Modest investment in long-term assets typical for micro-entity.
Share Capital	£100	Minimal share capital, standard for micro private limited companies.
Director Advance (Loan to Director)	£27,491 owed by director	Potential liquidity risk; advances reduce cash available for operations but no interest or repayment terms, indicating informal arrangement.
Company Status	Active	No regulatory or operational distress signs.
Account Category	Micro	Small scale with simplified reporting; limits detailed financial disclosure.
Filing Status	Up to date	No overdue accounts or confirmation statement filings, indicating compliance and good governance.

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3. Diagnosis

Drumstick Tree Limited’s financial "vital signs" suggest a business with improving financial health. The net assets have doubled over the last year, reflecting retained earnings or capital injections that strengthen the company's capital buffer — akin to a patient recovering strength after a period of weakness. Working capital is robust, meaning the company can comfortably cover its short-term liabilities, which is a key indicator of financial resilience.

The advance made to the director (£27,491) is a notable "symptom" that could mask liquidity constraints. While this loan is interest-free and has no fixed repayment date, it represents cash tied up and unavailable for business operations, similar to a blockage in the cash flow artery. This should be monitored carefully to ensure it does not impair operational liquidity.

There are no long-term liabilities or provisions, indicating a clean balance sheet without hidden financial burdens. The company operates within the micro-entity regime, so detailed profitability or cash flow data is limited, but the available balance sheet data shows no distress signals such as net current liabilities or negative equity.

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4. Recommendations

1. Monitor Director Advance:
   Establish a formal repayment plan or consider writing off some portion if repayment is unlikely. This will free up working capital and improve liquidity transparency.

2. Increase Share Capital or Retain Earnings:
   While net assets are increasing, adding more share capital or retaining profits can strengthen the equity base, providing a more robust financial cushion.

3. Cash Flow Management:
   Regularly track cash inflows and outflows to maintain "healthy cash flow" and avoid liquidity crunches, especially since the company is small and may be vulnerable to short-term shocks.

4. Prepare for Growth or External Financing:
   If the business plans to expand beyond micro scale, consider transitioning to the small company regime for more detailed accounts and potentially attracting external investors or lenders.

5. Governance and Compliance:
   Continue timely filing of statutory accounts and confirmation statements to avoid penalties and maintain good standing with Companies House.

6. Operational Review:
   Given the artistic creation industry classification, focus on managing project cash flows, client receivables, and cost control to sustain profitability.

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