FLORI SERVICES LIMITED

Executive Summary

FLORI SERVICES LIMITED shows ongoing liquidity challenges with negative working capital and insufficient cash to cover short-term liabilities, signaling financial stress. While equity has modestly improved, the company must urgently improve cash flow management, negotiate creditor terms, and consider capital support to stabilize and strengthen its financial health.

FLORI SERVICES LIMITED - Analysis Report

Company Number: 13062547

Analysis Date: 2025-07-20 13:20 UTC

Financial Health Assessment for FLORI SERVICES LIMITED

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1. Financial Health Score: D

Explanation:
The company shows persistent signs of liquidity stress indicated by negative net current assets over the past three years, signaling difficulty covering short-term liabilities with short-term assets. Although net assets and shareholders' equity have increased slightly, the underlying working capital deficit and low cash reserves relative to current liabilities suggest financial fragility. This grade reflects a business showing symptoms of financial distress needing urgent attention to improve liquidity and operational cash flows.

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2. Key Vital Signs

Metric	2023 Value (£)	Interpretation
Current Assets	4,118	Includes cash and debtors; relatively low and only marginally improved from prior years.
Cash at Bank	1,759	Slight increase but still insufficient to cover current liabilities; low cash buffer for operations.
Debtors	2,359	Decreasing trend, may indicate reduced sales or improved collection; however, still a significant amount tied up.
Current Liabilities	6,829	High short-term obligations exceeding current assets by £2,711; a red flag for liquidity.
Net Current Assets	-2,711	Negative working capital; company cannot cover short-term debts with short-term assets.
Total Assets Less Current Liabilities	2,364	Positive net assets but low relative to liabilities; modest equity base.
Shareholders' Funds	2,364	Small equity base reflecting limited capital and retained earnings; slight improvement from prior year.
Profit & Loss Reserves	2,264	Retained profits, positive but small in scale, indicating limited business growth or profitability.

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3. Diagnosis: Financial Symptoms and Underlying Health

• Liquidity Strain: The persistent negative net current assets over multiple years are akin to a patient with a low pulse rate—signalling the company’s inability to meet short-term obligations promptly. The cash position, although improved, remains insufficient to cover immediate liabilities, exposing the company to potential payment difficulties.

• Working Capital Deficiency: The company’s "working capital"—the difference between current assets and current liabilities—is consistently negative. This condition is a symptom of operational strain where day-to-day funds are inadequate, potentially leading to reliance on external credit or delayed supplier payments.

• Limited Asset Base: Tangible fixed assets remain unchanged and modest at £5,075, indicating limited investment in long-term resources to support growth or operational efficiency.

• Profitability and Growth Constraints: The slight increase in shareholders' funds and retained earnings suggests the company is generating some profit or capital injection but at a slow pace. The absence of an included profit and loss account limits detailed assessment, but the stable reserves imply mild profitability without strong growth.

• Dependence on a Single Director/Owner: Mr Philip Moller holds full control (75-100% shares and voting rights), which centralizes decision-making but may limit access to external capital or broader governance oversight.

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4. Prognosis: Future Financial Outlook

• If the company does not address its working capital deficit and improve cash flow management, it risks entering a critical state akin to a patient with untreated symptoms potentially leading to insolvency.
• The current trajectory shows slight improvement in equity and cash, which is positive, but the liquidity gap remains a serious concern.
• Without increased sales, enhanced collection processes, or external funding, the company might struggle to sustain operational expenses or invest in growth.
• Proactive financial management and restructuring of short-term liabilities are essential to avoid worsening financial distress.

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5. Recommendations: Steps to Improve Financial Wellness

1. Enhance Cash Flow Management:

   • Accelerate debtor collections by tightening credit control and offering incentives for early payment.
   • Reduce cash tied up in debtors and manage payment terms with suppliers to improve liquidity.

2. Address Working Capital Deficit:

   • Negotiate longer payment terms with creditors to ease immediate cash outflows.
   • Explore short-term financing options such as overdrafts or invoice factoring to bridge liquidity gaps.

3. Cost Control and Operational Efficiency:

   • Review operating expenses to identify and eliminate unnecessary costs, preserving cash.
   • Consider streamlining operations to improve margins and profitability.

4. Capital Injection or Equity Support:

   • If feasible, introduce additional equity investment to strengthen shareholders’ funds and provide a cash buffer.
   • Consider attracting new investors or partners to diversify capital sources and governance.

5. Strategic Business Review:

   • Evaluate the product/service line profitability and customer base to identify growth opportunities.
   • Implement a business plan focusing on increasing turnover while controlling costs.

6. Regular Financial Monitoring:

   • Establish key performance indicators (KPIs) related to liquidity, profitability, and cash conversion cycles.
   • Maintain timely financial reporting and forecasting to detect early warning signs.

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Medical Analogy Summary:
FLORI SERVICES LIMITED exhibits "symptoms of financial distress" primarily through a persistent "low pulse" of liquidity and a "deficient working capital system" that hampers its short-term survival. Despite a relatively stable equity "immune system," the company needs urgent "treatment" through cash flow enhancement, liability management, and strategic interventions to restore financial health and avoid "critical failure."

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