FAGEE LEADERSHIP 4 EXCELLENCE LTD
Executive Summary
FAGEE LEADERSHIP 4 EXCELLENCE LTD shows a stable financial foundation typical of a newly incorporated micro-entity, with positive net assets but a slight short-term liquidity concern indicated by negative working capital. The company’s overall financial health is rated "B", reflecting a generally sound position with manageable risks. Focused efforts on improving cash flow and working capital management will be critical to supporting sustainable growth and operational resilience.
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This analysis is opinion only and should not be interpreted as financial advice.
FAGEE LEADERSHIP 4 EXCELLENCE LTD - Analysis Report
Financial Health Assessment for FAGEE LEADERSHIP 4 EXCELLENCE LTD
Assessment Date: Financial year ended 30 June 2024
1. Financial Health Score: B
Explanation:
The company demonstrates a solid foundation typical for a micro-entity in its first year of operation. It has positive net assets and shareholder funds, indicating a stable equity base. However, the relatively small scale of operations and modest current assets relative to current liabilities suggest some caution is warranted. The score "B" reflects a generally healthy but early-stage financial position with room to strengthen liquidity and operational cash flow.
2. Key Vital Signs
Metric | Value (£) | Interpretation |
---|---|---|
Fixed Assets | 3,872 | Represents investment in long-term assets. Healthy for a new micro-company starting operations. |
Current Assets | 1,775 | Short-term assets like cash and receivables; relatively low, indicating limited liquid resources. |
Current Liabilities | 2,356 | Obligations due within one year exceed current assets, resulting in a slight working capital deficit. |
Net Current Assets | (581) | Negative working capital indicates a potential short-term liquidity strain ("symptom of distress"). |
Total Assets less Liabilities | 3,291 | Positive equity base, showing the company has net value after debts are accounted for. |
Shareholders’ Funds | 3,291 | Equity attributable to owners matches net assets, indicating no hidden liabilities or losses. |
Number of Employees | 1 | Very small workforce consistent with micro-entity status. |
Additional Context:
- The company is classified as a micro-entity, so filing requirements are minimal and financial structure is typical for a start-up.
- The director and majority shareholder is a single individual, providing clear control but also concentration risk.
- The company operates in artistic creation, cultural education, social sciences research, and textile manufacturing sectors—diverse but niche areas.
3. Diagnosis: What the Financial Data Reveals About Business Health
The financial "vital signs" suggest that FAGEE LEADERSHIP 4 EXCELLENCE LTD is in the early stages of its lifecycle, with foundational capital invested in fixed assets and modest liquid resources to support operations. The negative net current assets (working capital) present the primary symptom of potential liquidity tightness, meaning the company may face challenges meeting short-term obligations without additional cash inflows or financing.
However, the presence of positive net assets and shareholder funds signals that the business has a healthy equity cushion — akin to a patient with stable vital signs but a slight nutritional deficiency (cash flow). This situation is common in start-ups and micro-entities where initial investments precede steady revenue generation.
The company’s ability to manage and improve its liquidity will be critical in the near term. Given the single employee/director structure and concentrated ownership, decision-making is streamlined but dependent on the director’s capacity and resources.
4. Recommendations: Specific Actions to Improve Financial Wellness
Improve Working Capital Management:
Aim to increase current assets or reduce current liabilities to achieve positive net working capital. This could involve accelerating receivables collection, negotiating extended payment terms with suppliers, or securing short-term credit facilities.Build Cash Reserves:
Establish a healthy cash buffer to smooth operational cash flow and absorb unexpected expenses. Consider phased capital injections or reinvestment of profits.Monitor and Control Expenses:
Keep a tight control on overheads and operational costs, particularly as the company scales activity in artistic and educational sectors that may have variable revenue streams.Diversify Revenue Streams:
Given the diverse SIC codes, leverage cross-sector opportunities to stabilize income, reducing dependence on any single market segment.Plan for Growth and Formal Reporting:
As the company grows beyond micro-entity thresholds, prepare to adopt more robust accounting and auditing processes to maintain transparency and attract potential investors or partners.Risk Management:
With single-director control, ensure proper governance and succession planning to avoid operational disruptions.
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