FAIRWAY EVENTS LTD

Executive Summary

FAIRWAY EVENTS LTD is currently solvent but exhibits signs of emerging liquidity stress, with a significant decline in cash reserves and working capital over the past year. The company should focus on improving cash flow management and reviewing inventory levels to stabilize its financial condition. Without intervention, these symptoms could lead to deeper financial difficulties.

FAIRWAY EVENTS LTD - Analysis Report

Company Number: SC717088

Analysis Date: 2025-07-20 17:06 UTC

Financial Health Assessment of FAIRWAY EVENTS LTD (as at 31 December 2023)

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1. Financial Health Score: C

Explanation:
FAIRWAY EVENTS LTD shows signs of moderate financial stability but also symptoms of emerging stress. While the company remains solvent with positive net current assets and shareholders' funds, there is a significant reduction in cash reserves and working capital compared to the previous year. This deterioration indicates some liquidity strain that requires attention to avoid potential financial distress.

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2. Key Vital Signs (Metrics & Interpretation):

Metric	2023 Value	2022 Value	Interpretation
Cash at bank and in hand	£8,941	£51,696	Sharp decline in cash reserves suggests cash flow pressures — a warning symptom needing urgent care.
Current Assets	£14,051	£51,696	Decrease mainly due to cash drop; current assets are shrinking, limiting short-term liquidity.
Current Liabilities	£9,224	£18,468	Decline in short-term liabilities is positive but not enough to offset asset drop.
Net Current Assets (Working Capital)	£4,827	£33,228	Working capital has shrunk considerably, indicating reduced buffer to cover short-term debts.
Shareholders’ Funds (Equity)	£4,827	£33,228	Equity has dropped sharply, signaling erosion of retained earnings or accumulated losses.
Stock (Inventory)	£5,110	£0	New stock holding introduced, which ties up cash but could indicate preparing for future sales.
Number of Employees	2	2	Stable workforce size suggests no immediate cost-cutting in staffing.

Additional Notes:

• The company is exempt from audit, so figures are unaudited but prepared under UK GAAP for small entities.
• Directors' control is concentrated (one individual holds 75-100% shares and voting rights), which may impact governance dynamics.

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3. Diagnosis: Financial Condition and Underlying Health

FAIRWAY EVENTS LTD’s financial "vital signs" reveal a company in a fragile state. The sharp drop in cash and working capital between 2022 and 2023 signals symptoms of liquidity stress—akin to a patient whose "pulse" (cash flow) is weakening. This may be due to increased stock levels or slower collections, but the accounts do not show income statement details to pinpoint causes.

The company’s equity erosion is a concerning symptom, potentially reflecting losses or distributions exceeding profits. While the current liabilities have decreased, they still consume a significant proportion of current assets, leaving a narrow margin of safety.

The introduction of stock (inventory) in 2023 ties up cash resources and may represent an investment in future revenue generation. However, if inventory turnover is slow, this could exacerbate liquidity issues.

Overall, the company is solvent but showing symptoms of financial stress that could worsen if cash flow is not managed carefully. The "heart" of the business—cash flow—is weak, suggesting the need for close monitoring and corrective treatment.

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4. Recommendations for Financial Wellness Improvement

Immediate Actions:

• Enhance Cash Flow Management: Tighten credit control, accelerate debtor collections, and review payment terms with suppliers to improve cash inflows and defer outflows where possible.
• Inventory Review: Assess stock levels for slow-moving or obsolete items to avoid cash being locked unnecessarily. Consider just-in-time inventory if feasible.
• Cost Controls: Review overheads and operating expenses to identify savings without impairing business capabilities.

Medium-Term Strategies:

• Profitability Analysis: Obtain detailed income statements to identify profit margins and loss drivers. Explore pricing strategies, cost of sales, and overhead efficiency.
• Capital Structure Review: With equity contraction, consider whether additional capital injection or refinancing may be needed to strengthen the balance sheet.
• Financial Forecasting: Develop rolling forecasts and scenario planning to anticipate cash needs and avoid liquidity crises.

Governance & Reporting:

• Maintain transparent financial reporting and consider professional advice to detect early warning signs.
• The directors should monitor financial performance regularly to detect symptoms early and intervene promptly.

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