FARQUHAR DESIGN LTD

Executive Summary

FARQUHAR DESIGN LTD is financially stable with healthy working capital and positive net assets, but recent reductions in current assets warrant careful cash flow management. The company demonstrates good compliance and prudent liability control, positioning it well for continued operations with cautious growth. Strengthening cash reserves and monitoring liquidity will enhance its financial wellness going forward.

FARQUHAR DESIGN LTD - Analysis Report

Company Number: 13634604

Analysis Date: 2025-07-20 11:43 UTC

Financial Health Assessment for FARQUHAR DESIGN LTD

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1. Financial Health Score: B

Explanation:
FARQUHAR DESIGN LTD exhibits a generally healthy financial position for a micro-entity, with positive net current assets and shareholders’ funds consistently above £14,000. The company maintains a stable equity base and manageable liabilities. However, the recent decline in current assets and net assets from 2023 to 2024, although not alarming, suggests some emerging caution. Overall, the company is financially sound but should monitor liquidity closely to maintain stability.

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2. Key Vital Signs

Metric	2024 Value (£)	2023 Value (£)	Interpretation
Current Assets	16,770	30,215	Reduction in liquid resources; may indicate cash outflows or reduced receivables. Needs monitoring.
Current Liabilities	2,693	12,721	Significant decrease in short-term debts; positive sign of improved creditor management or repayments.
Net Current Assets	14,077	17,494	Healthy working capital; positive buffer to cover short-term obligations, though slightly reduced.
Net Assets / Shareholders’ Funds	14,077	17,494	Positive equity indicating solvency; slight erosion since last year but still firmly positive.
Average Number of Employees	1	1	Consistent micro-entity staffing; low overheads consistent with small business scale.

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3. Diagnosis: What the Numbers Reveal

• Healthy Liquidity, but Slightly Diminishing: The company has a solid working capital position, meaning it can comfortably meet short-term debts. However, the drop in current assets by nearly 45% from £30,215 to £16,770 suggests a "symptom of distress" that could be due to lower cash reserves or slower customer payments. The reduction in current liabilities by nearly 79% is a positive sign, possibly reflecting proactive debt management or fewer outstanding payables.

• Stable Solvency: Shareholders’ funds remain positive, indicating that the company’s assets exceed liabilities. This is a sign of financial "vitality," suggesting no immediate risk of insolvency.

• Micro-entity Scale and Risk: With just one employee and micro-entity status, the business is small and likely agile but may be vulnerable to market shocks or cash flow variability typical of small design firms.

• No Overdue Filings and Compliance: The company is current with its accounts and confirmation statement filings, reflecting good governance and compliance—a "healthy immune system" against regulatory penalties.

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4. Recommendations

• Cash Flow Monitoring: Given the decline in current assets, maintain vigilant cash flow forecasting. Ensure timely invoicing and collection to avoid liquidity crunches.

• Cost Control: Continue managing liabilities carefully. The reduction in current liabilities is positive; maintain this discipline to avoid sudden financial stress.

• Build Cash Reserves: Aim to rebuild some cash buffer to handle unexpected expenses or downturns in client demand.

• Growth Planning: Consider strategies to expand client base or service offerings to increase turnover and asset base, which will strengthen financial resilience.

• Financial Reporting: Although audit exemption applies, consider preparing more detailed internal financial reports to identify trends earlier and support better decision-making.

• Director’s Oversight: The sole director, Mr R. Farquhar, should maintain active oversight on financial management to detect early symptoms of financial strain.

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