EDWARDS IT CONSULTANTS LIMITED

Executive Summary

Edwards IT Consultants Limited shows a stable but declining financial position with key liquidity and equity indicators dropping significantly in the latest year. While still solvent and compliant, the company faces early signs of financial strain typical for micro entities. Focused cash flow management and rebuilding net assets are critical to restoring financial health.

EDWARDS IT CONSULTANTS LIMITED - Analysis Report

Company Number: 14079306

Analysis Date: 2025-07-20 14:19 UTC

Financial Health Assessment: EDWARDS IT CONSULTANTS LIMITED

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1. Financial Health Score: C

Explanation:
The company's financial health currently rates as a "C" grade. It demonstrates basic solvency and positive net assets; however, the decline in net current assets and net assets over the past year signals some early symptoms of financial strain. The small scale (Micro category) and limited operational complexity also constrain growth potential and resilience.

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2. Key Vital Signs

Metric	2024 (£)	2023 (£)	Interpretation
Current Assets	17,298	30,014	Sharp decrease in liquid or near-liquid assets; may indicate less cash or receivables on hand.
Current Liabilities	11,088	18,149	Decrease in short-term debts; positive if due to repayment, but needs correlation with assets.
Net Current Assets	6,210	11,865	Working capital dropped nearly 50%; weaker buffer against short-term obligations.
Total Assets Less Current Liabilities	6,210	11,865	Reflects net assets; significant reduction may signal asset depreciation or losses.
Net Assets / Shareholders Funds	6,210	11,865	Equity base halved; possible erosion of retained earnings or capital withdrawals.
Employee Count	1	1	Stable but minimal human resource capacity, typical for micro-entity.

Additional Notes:

• Director’s loan account shows a net receivable balance (£333) owed to the director, indicating some internal financing.
• The company remains active and compliant with filing deadlines, which is a positive operational sign.

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3. Diagnosis

The company exhibits "symptoms of financial stress" primarily through the marked decline in working capital and net assets over the latest financial year. This weakening "cash flow pulse" suggests reduced liquidity and financial flexibility. While the firm remains solvent with positive net assets and working capital, the nearly 50% decrease in these metrics signals caution.

The micro-entity status and single-employee structure reflect a very small-scale operation, which inherently limits scale economies and financial robustness. The director’s loan balance, although small and interest-free, suggests reliance on internal financing to manage cash flow, a common scenario in early-stage or small companies.

No audit requirement and simplified accounts provide limited detail, but the downward trend in key financial metrics can be likened to "early symptoms" before more serious distress. Immediate attention to cash management and profitability is advisable to prevent deterioration.

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4. Recommendations

To improve financial wellness and strengthen the company’s financial health, the following steps are advisable:

• Improve Cash Flow Management:
  Monitor receivables and payables closely to avoid liquidity crunches. Aim to rebuild current assets, particularly cash reserves.

• Enhance Revenue Generation or Cost Control:
  Investigate opportunities to increase sales or consultancy engagements. Alternatively, reduce non-essential expenses to stabilize margins.

• Director Loan Management:
  Formalize the director loan arrangement to ensure clear terms and repayment plans, preventing surprises in cash flow.

• Build Financial Buffer:
  Aim to restore net current assets to previous levels by retaining profits or injecting additional capital to absorb shocks.

• Regular Financial Monitoring:
  Establish monthly financial reviews focusing on liquidity ratios (e.g., current ratio), cash flow forecasts, and profitability metrics.

• Seek Professional Advice:
  Engage with accountants or financial advisors periodically to detect early signs of financial distress and strategize growth plans.

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