ECH ASSET SOLUTIONS LTD

Executive Summary

ECH Asset Solutions Ltd maintains a stable financial base with positive net assets and working capital, though recent declines in liquidity suggest emerging cash flow challenges. Careful cash management and strategic asset use are recommended to strengthen financial health and support growth.

ECH ASSET SOLUTIONS LTD - Analysis Report

Company Number: 13759296

Analysis Date: 2025-07-29 20:49 UTC

Financial Health Assessment for ECH ASSET SOLUTIONS LTD (As of 30 November 2023)

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1. Financial Health Score: C

Explanation:
ECH Asset Solutions Ltd shows a mixed financial picture typical of a young micro-entity. The company maintains positive net assets and working capital, which are the "vital signs" indicating basic financial viability. However, a notable decline in current assets and net current assets from the previous year signals emerging "symptoms of financial stress" that need attention to prevent worsening liquidity or solvency issues.

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2. Key Vital Signs

Metric	2023 (£)	2022 (£)	Interpretation
Fixed Assets	16,150	0	Investment in long-term assets, indicating growth or capital expenditure.
Current Assets	37,154	89,707	Decreased significantly, could indicate reduced cash reserves or slower receivables collection.
Current Liabilities	29,654	78,099	Also decreased, but at a slower rate than current assets, affecting liquidity ratios.
Net Current Assets (Working Capital)	7,500	11,608	Positive but reduced; "healthy cash flow" is weakening, potential liquidity concerns.
Total Assets Less Current Liabilities	23,650	11,608	Improved mainly due to fixed asset acquisition, showing some strengthening of the asset base.
Net Assets (Shareholders' Funds)	21,650	10,108	Increased equity base, indicating retained profits or capital infusion, a positive sign.

Additional Notes:

• No employees during the year, suggesting a lean, owner-operated structure.
• The company is a micro-entity, so reporting is simplified, and no audit was required.
• The director owns 50-75% shares and controls voting rights, indicating concentrated control.

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3. Diagnosis

ECH Asset Solutions Ltd is in a stable but cautious financial state. The company’s net assets and working capital remain positive, which is essential for ongoing operations. The increase in fixed assets suggests investment in business infrastructure or equipment, a sign of preparation for growth or operational improvement.

However, the significant decline in current assets (from £89,707 to £37,154) is a "symptom" that could reflect cash outflows, build-up of inventory that is not moving, or slower customer payments. Although current liabilities have decreased, the narrower gap between current assets and liabilities reduces the company's liquidity cushion, potentially increasing the risk of short-term cash flow challenges.

Given the company’s micro status and recent incorporation (2021), these fluctuations may be typical of a growing business adjusting its capital structure and operations. The absence of employees suggests reliance on the director or contractors, which limits fixed overhead but may constrain scaling.

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4. Recommendations

• Improve Cash Flow Management:
  Closely monitor receivables and inventory turnover to prevent cash "blockages." Consider negotiating better payment terms with customers or suppliers to smooth cash inflows and outflows.

• Review Asset Utilization:
  Assess the newly acquired fixed assets (£16,150) for their contribution to revenue generation and profitability. Avoid over-investment in assets without corresponding income.

• Strengthen Working Capital:
  Aim to rebuild net current assets closer to or above previous levels to ensure a healthy liquidity buffer. This could involve short-term financing or adjusting credit policies.

• Prepare for Growth Carefully:
  As a micro-entity, keep overhead low and consider incremental growth strategies to avoid overstretching resources.

• Maintain Compliance and Reporting:
  Continue timely filing of accounts and confirmation statements to avoid penalties and maintain good standing.

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Executive Summary

ECH Asset Solutions Ltd exhibits a foundationally sound financial position with positive equity and working capital but shows signs of liquidity tightening from reduced current assets. Investments in fixed assets reflect growth intentions, yet cash flow management requires attention to prevent future distress. With prudent financial oversight, the company can stabilize and build on its asset base to support sustainable growth.