F ATKINSON (POTATOES) LIMITED

Executive Summary

F ATKINSON (POTATOES) LIMITED displays a sound financial position for a young agricultural business, with strong liquidity and positive equity. Key risks include managing large debtors and a significant corporation tax creditor, which require careful cash flow and tax planning. With improved debtor control and proactive financial management, the company is well-positioned for stable growth.

F ATKINSON (POTATOES) LIMITED - Analysis Report

Company Number: 14488265

Analysis Date: 2025-07-29 13:14 UTC

Financial Health Assessment Report: F ATKINSON (POTATOES) LIMITED

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1. Financial Health Score: B

Explanation:
The company demonstrates a solid financial footing with strong net current assets and positive shareholders' funds after its first full reporting period. The absence of long-term liabilities and a healthy working capital position indicate financial stability typical for a young small agricultural business. However, limited profitability disclosure and a significant current tax creditor suggest areas needing attention to ensure ongoing liquidity and tax planning. Overall, the health is good but with some cautionary signs that should be monitored.

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2. Key Vital Signs

Metric	Amount (£)	Interpretation
Current Assets	211,083	Healthy short-term assets, including cash and debtors, indicating liquidity.
Cash at Bank	60,568	Reasonable cash reserve to meet immediate obligations.
Debtors	150,515	Significant receivables which need to be collected promptly to maintain cash flow.
Current Liabilities	53,602	Includes large corporation tax payable (£52,092), manageable short-term debts.
Net Current Assets	157,481	Strong positive working capital, a vital sign of liquidity and operational health.
Shareholders’ Funds	157,481	Solid equity base reflecting retained profits or capital contributions.
Company Age	~1.5 years	Early-stage company; financial history limited.

Interpretation:

• Healthy Cash Flow: Cash balances and positive net current assets suggest the company can cover its immediate liabilities without distress.
• Receivables Concentration: Debtors are a large component of current assets; delays in collection could pose liquidity risks.
• Tax Liability: Corporation tax of over £52k is a notable creditor "symptom" that requires careful management to avoid cash flow strain.
• No Debt Indicators: The absence of borrowings or overdrafts points towards a low financial risk profile.
• Profit & Loss Reserve: Retained earnings near the equity total suggest profitability or capital injection supporting the balance sheet.

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3. Diagnosis

The financial "vital signs" of F ATKINSON (POTATOES) LIMITED suggest a business in good health for its early stage. The company shows a strong liquidity position with net current assets three times larger than current liabilities, indicating a "healthy pulse" in terms of short-term financial stability.

The large debtor balance is a "symptom" warranting close monitoring. Since cash flow is the lifeblood of any farming operation, delays in collecting receivables could cause "circulatory issues"—potential cash shortages—even if the business is profitable on paper.

The substantial corporation tax creditor signals that the company has taxable profits but may face a timing mismatch between tax payments and cash inflows, a common challenge in agriculture due to seasonal revenue patterns.

The absence of long-term debt and a positive equity base suggest no "chronic" financial stress or over-leverage, which is a positive prognostic sign. However, as a newly incorporated entity (~1.5 years old), the company lacks a longer financial track record, requiring cautious optimism.

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4. Recommendations

To maintain and enhance financial wellness, the company should consider the following action plan:

• Strengthen Debtor Management: Implement tighter credit control and prompt invoicing to improve cash conversion cycles. Consider incentives for early payments or regular follow-ups to reduce debtor days.
• Tax Planning: Work with a tax advisor to manage corporation tax liabilities proactively. Ensure tax payments are scheduled to align with cash inflows to avoid liquidity crunches. Consider setting aside reserves for future tax bills.
• Cash Flow Forecasting: Develop rolling cash flow forecasts to anticipate any shortfalls, especially given the seasonal nature of mixed farming activities. This will allow for timely financing decisions if needed.
• Profitability Monitoring: Although profit and loss details were not disclosed, track operational profitability closely to ensure sustainable margins. Look for cost control opportunities and efficiency improvements in farming operations.
• Build Reserves: As profitability allows, build cash reserves to cushion against seasonal fluctuations or unexpected expenses.
• Prepare for Growth: With a stable financial base, explore opportunities for scaling operations or diversifying revenue streams prudently without overextending financial resources.

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