ELEMTO PROJECTS LTD

Executive Summary

ELEMTO PROJECTS LTD has experienced a significant financial downturn over the last year, shifting from a stable positive net asset position to a negative equity and working capital scenario. This indicates liquidity strains and potential insolvency risk if corrective measures are not taken. Immediate focus on cash flow management, cost control, and balance sheet strengthening is critical to restoring the company’s financial health.

ELEMTO PROJECTS LTD - Analysis Report

Company Number: 14158015

Analysis Date: 2025-07-29 18:59 UTC

Financial Health Assessment for ELEMTO PROJECTS LTD

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1. Financial Health Score: D

Explanation:
The company’s financial health shows clear signs of distress in the most recent year. From a previously positive position in 2023, with net current assets of £9,474 and shareholders’ funds of the same amount, the company has swung to negative net current assets of £-2,448 and shareholders’ funds of £-2,448 in 2024. This indicates the company is currently technically insolvent on a balance sheet basis, which is a critical warning sign. The score "D" reflects that the company is in a precarious financial state requiring urgent attention.

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2. Key Vital Signs

Metric	2023 (£)	2024 (£)	Interpretation
Current Assets	16,015	7,433	Sharp decrease in liquid assets/cash worth
Current Liabilities	6,541	9,881	Increase in short-term debts owed
Net Current Assets (Working Capital)	9,474	-2,448	Shift from positive to negative working capital; "symptom of liquidity strain"
Shareholders’ Funds (Equity)	9,474	-2,448	Equity erosion indicating net losses or increased liabilities
Number of Employees	1	1	Minimal staffing, indicating small operational scale

Interpretation:

• Healthy cash flow would reflect positive net current assets, but ELEMTO PROJECTS LTD shows a reversal to negative working capital, a key "symptom of distress" in short-term financial health.
• The increase in current liabilities coupled with a decrease in current assets suggests the company may be struggling to meet immediate obligations.
• Negative shareholders’ funds highlight that liabilities exceed assets, a critical warning sign of insolvency risks.

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3. Diagnosis

ELEMTO PROJECTS LTD’s financial statements reveal a company that has deteriorated financially within a year. The swing from positive working capital and equity to negative positions suggests cash flow challenges, possible operational losses, or increased short-term borrowing. The company operates as a micro-entity in management consultancy, so the scale is small with only one employee.

The "patient" (company) is showing symptoms of financial distress likely due to increased current liabilities outpacing the company's liquid assets. This could be due to delayed client payments, increased expenses, or investment in short-term obligations without sufficient cash inflows.

While the company remains active and has complied with filing deadlines (no overdue accounts or returns), the balance sheet health indicates a fragile condition that must be addressed promptly to avoid formal insolvency procedures like administration or liquidation.

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4. Recommendations

• Enhance Cash Flow Management: Prioritize collecting receivables and negotiate extended payment terms with creditors to improve liquidity. Consider short-term financing options only if sustainable.
• Cost Control: Review all operational expenses to identify areas for immediate savings given the micro scale of operations. Reducing overheads can help stabilize finances.
• Equity Injection: Consider a capital injection from shareholders or external investors to restore positive equity and strengthen the balance sheet.
• Financial Monitoring: Implement a rolling cash flow forecast and regular financial reviews to detect early warning signs and act swiftly.
• Strategic Review: Evaluate the business model and client base to identify growth opportunities or diversification to increase income streams.
• Professional Advice: Engage with financial advisors or turnaround specialists to develop a comprehensive recovery plan and avoid insolvency risks.

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