ECOM COLLAB CLUB LIMITED

Executive Summary

ECOM COLLAB CLUB LIMITED shows an improved liquidity position with strong cash reserves but is under pressure from rising current liabilities and a significant decline in net assets. The financial health is borderline, indicating the need for urgent focus on working capital management and cost control to prevent further deterioration. With strategic actions, the company can stabilize and improve its financial wellness.

ECOM COLLAB CLUB LIMITED - Analysis Report

Company Number: 13949001

Analysis Date: 2025-07-29 12:58 UTC

Financial Health Assessment for ECOM COLLAB CLUB LIMITED

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1. Financial Health Score: C

Explanation:
The company shows mixed vital signs. While cash reserves have improved significantly, net assets have sharply declined, indicating some financial stress. The current liabilities nearly match current assets, leaving very limited working capital. This suggests a borderline healthy condition, with symptoms of financial strain but no immediate critical distress.

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2. Key Vital Signs

Metric	2024 (£)	2023 (£)	Interpretation
Current Assets	120,751	25,086	Strong increase, mainly cash; good liquidity boost.
Cash at Bank	92,101	15,086	Healthy cash flow infusion or retained cash, positive sign for short-term obligations.
Debtors	28,650	10,000	Increase in receivables; needs monitoring for collection risk.
Current Liabilities	120,126	10,884	Sharp rise; nearly equal to current assets indicating tight liquidity and potential payment pressure.
Net Assets (Shareholders' Funds)	625	14,202	Significant reduction; indicates erosion of retained earnings or accumulated losses.
Share Capital	4	4	Minimal; typical for small private companies.
Number of Employees	2	2	Stable staffing level, small team.

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3. Diagnosis

• Liquidity Status: The company’s cash position has improved impressively (from £15K to £92K), which is a positive "healthy pulse" for day-to-day operations. However, the current liabilities have risen almost elevenfold (from £10.9K to £120.1K), which means the company is facing a "symptom of distress" in the form of high short-term obligations.

• Working Capital: With current assets (£120.7K) almost equal to current liabilities (£120.1K), the company has an extremely tight working capital situation. This "fragile heartbeat" suggests limited buffer to handle unforeseen expenses or payment delays.

• Net Asset Decline: The drastic fall in net assets from £14.2K to just £625 is concerning—it indicates that accumulated losses or increased liabilities have eroded shareholder equity. This could be a "sign of financial fatigue," potentially stemming from operational losses or increased creditor pressure.

• Revenue and Profitability: While detailed profit and loss figures are not available, the reduction in net assets alongside increased liabilities hints at possible ongoing losses or aggressive credit usage.

• Directors and Control: The company is controlled by two directors, both with significant influence. Stability in management is a positive, but their strategy must focus on restoring financial strength.

• Industry Context: Operating in advertising agencies (SIC 73110), a competitive sector often requiring upfront investments with delayed payments, the company’s liquidity challenges might be linked to its business model.

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4. Recommendations

• Improve Working Capital Management:

  • Tighten credit control to reduce debtor days and improve cash inflows.
  • Negotiate longer payment terms with suppliers to ease current liabilities.

• Cost Control and Profitability Analysis:

  • Conduct a thorough review of operational expenses to identify and cut non-essential costs.
  • Develop a clear plan to improve gross margins, possibly by revising pricing or client mix.

• Monitor Cash Flow Closely:

  • Maintain healthy cash reserves to avoid liquidity crises. Consider short-term financing only if it supports growth or operational continuity without adding excessive risk.

• Strategic Financial Planning:

  • Prepare forecasts to anticipate cash needs and plan for investments or repayments.
  • Engage with accountants or financial advisors to explore restructuring options if losses continue.

• Stakeholder Communication:

  • Keep shareholders and creditors informed to maintain confidence and avoid surprises.
  • Explore options for equity injection if necessary to rebuild net asset base.

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Medical Analogy Summary

ECOM COLLAB CLUB LIMITED currently exhibits a "rapid heartbeat" in its liquidity position with strong cash inflows but also a "high fever" of rising liabilities that threaten stability. Its "immune system"—shareholders’ equity—has weakened, signaling the risk of "financial fatigue." Immediate lifestyle changes (better working capital and cost management) are essential to restore health and avoid chronic illness (insolvency).

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