ECOMM HERO ACADEMY LTD

Executive Summary

ECOMM HERO ACADEMY LTD is a small but profitable company with a strong cash position and positive working capital. However, rising current liabilities and reliance on director loans present risks that warrant careful management. With prudent financial controls and strategic reinvestment, the company’s financial health outlook remains positive.

ECOMM HERO ACADEMY LTD - Analysis Report

Company Number: 12801819

Analysis Date: 2025-07-20 15:09 UTC

Financial Health Assessment for ECOMM HERO ACADEMY LTD

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1. Financial Health Score: B

Explanation:
ECOMM HERO ACADEMY LTD shows a generally stable financial condition with improving working capital, positive retained earnings, and a modest asset base. While the company is small and early-stage (incorporated in 2020), it demonstrates solid cash reserves and profitability for its size. However, increasing current liabilities and reliance on director loans signal caution. The score of B reflects good financial health with some symptoms that require attention to maintain stability and growth.

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2. Key Vital Signs

Metric	30 Nov 2023	Interpretation
Current Assets	£34,152	Healthy short-term asset base, mostly cash (£33,087).
Current Liabilities	£29,402	Current liabilities have doubled since previous year, warrants monitoring.
Net Current Assets	£4,750	Positive working capital indicates ability to cover short-term debts.
Shareholders’ Funds	£6,818	Positive equity, increased from £2,366 last year, showing retained profits.
Retained Earnings	£6,718	Accumulated profits after dividends, sign of profitability.
Cash Position	£33,087	Strong cash "pulse," indicating good liquidity.
Trade Debtors	£0	No outstanding receivables, reducing risk of bad debts.
Trade Creditors	£147	Very low trade payables, indicating good supplier relationships or low credit use.
Director Loans	£9,938	Significant reliance on director funding to meet liabilities.
Profit for the Year	£14,452	Positive "heartbeat" with profitability in the latest year.
Dividends Paid	£10,000	Substantial dividends paid, which reduces retained earnings.

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3. Diagnosis

ECOMM HERO ACADEMY LTD displays several signs of financial health akin to a patient recovering well but still under observation:

• Healthy Cash Flow: The company holds a strong cash position, which is vital for meeting day-to-day obligations without distress. This cash "heartbeat" is the company’s lifeline.
• Working Capital Positive: Net current assets are positive (£4,750), indicating the company can cover its short-term liabilities with current assets.
• Profitability: The company reported a profit of £14,452 for the year ended 30 November 2023, which is a strong symptom of operational success.
• Increased Liabilities: The near doubling of current liabilities (£29,402 vs £14,782 prior year) signals a symptom to watch. This increase is partly due to director loans and amounts owed to a related party ("Room C"). This reliance on internal funding could be a weakness if external financing or revenue growth does not improve.
• Dividend Payments: The payment of dividends (£10,000) when the company is still small and growing could strain cash reserves if not carefully managed.
• Absence of Trade Debtors: No outstanding trade debtors indicate efficient collection or possibly limited credit sales, which reduces risk but might also suggest limited customer base or sales scale.
• Asset Base: Tangible fixed assets are minimal (£2,068), typical for a service company with low capital expenditure needs.

Overall, the financial "vitals" suggest a company that is profitable and liquid but with symptoms of increased financial leverage and dependency on director funding that could pose risks if not managed prudently.

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4. Recommendations

To maintain and improve financial wellness, ECOMM HERO ACADEMY LTD should consider the following actions:

1. Strengthen Cash Flow Management: Continue to build cash reserves and monitor liquidity closely to avoid distress, especially given rising current liabilities.
2. Manage Liabilities Prudently: Develop a plan to reduce dependence on director loans and related party balances. Explore external financing options or improve profitability to fund operations organically.
3. Monitor Dividend Policy: Reassess dividend payments to ensure they do not compromise working capital or growth potential. Retaining earnings may be better for reinvestment in early growth stages.
4. Expand Customer Base: Increase trade sales and establish receivables (trade debtors) to diversify cash inflows, reducing dependence on director funds.
5. Cost Control: Keep tight control on operating expenses and accrued liabilities to avoid surprises in short-term liabilities.
6. Regular Financial Reviews: Implement periodic financial health checks to identify symptoms of distress early and adjust strategy accordingly.
7. Consider Audit or External Review: Although currently exempt, an audit or external financial review may provide additional assurance and credibility for stakeholders.

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