FORTUNA SOLUTIONS LTD

Executive Summary

Fortuna Solutions Ltd demonstrates a fragile financial condition characterized by strong fixed assets but severe liquidity constraints reflected in persistently negative working capital. While the business remains solvent with positive equity, it is under financial stress and requires focused efforts on cash flow improvement and capital restructuring to ensure sustainable operations. Immediate management of short-term liabilities and enhancement of liquidity will be critical for financial wellness.

FORTUNA SOLUTIONS LTD - Analysis Report

Company Number: 12740174

Analysis Date: 2025-07-20 19:06 UTC

Comprehensive Financial Health Assessment of Fortuna Solutions Ltd

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1. Financial Health Score: D

Explanation:
Fortuna Solutions Ltd shows signs of financial distress primarily due to persistently negative net current assets (working capital) over recent years, indicating liquidity constraints. Despite positive net assets, the company’s current liabilities significantly exceed current assets, which can jeopardize its ability to meet short-term obligations. The fixed assets base is substantial, but this is not easily convertible to cash, suggesting potential cash flow challenges. Overall, the company is surviving but is under financial strain.

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2. Key Vital Signs

Metric	Latest Value (31 Dec 2023)	Interpretation
Fixed Assets	£643,350	Strong investment in long-term assets; good operational base.
Current Assets	£29,850	Low liquid assets; limited cash and receivables.
Current Liabilities	£641,674	High short-term debts due within one year; significant pressure on liquidity.
Net Current Assets (Working Capital)	-£611,824	Negative by a large margin; indicates inability to cover short-term liabilities with short-term assets.
Total Assets Less Current Liabilities	£31,526	Positive but marginal net asset position; solvency exists but weak.
Shareholders’ Funds (Equity)	£31,526	Small equity base; minimal buffer to absorb losses.
Average Number of Employees	4	Small workforce consistent with micro-entity size.

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3. Diagnosis: Financial Condition Analysis

• Liquidity Symptoms:
  The company exhibits a "symptom of distress" with a highly negative working capital position (-£611k), meaning it may struggle to pay its short-term debts as they fall due. This is akin to a patient having a healthy heart (solid fixed assets) but suffering from poor blood circulation (cash flow problems).

• Solvency Status:
  Although shareholders’ funds are positive (£31.5k), they are quite low relative to the scale of current liabilities. This indicates the company is solvent but operating on a very tight financial margin, with limited capacity to absorb financial shocks or losses.

• Asset Structure:
  The large fixed asset base (£643k) suggests the company is asset-heavy, which is common in industries with property or equipment investments. However, these assets are not liquid and cannot be quickly converted into cash to ease short-term financial strain.

• Trend Observation:
  Shareholders’ funds have improved from negative in 2019 and 2020 to small positive values in recent years, indicating some recovery or capital injections. However, the persistent negative working capital over 5 years signals ongoing operational or financing challenges.

• Control and Management:
  The company is controlled by two individuals with significant control rights (75-100% shares and voting rights), which may streamline decision-making but also concentrates financial risk.

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4. Recommendations: Strategies to Improve Financial Wellness

1. Improve Liquidity Management:

   • Increase current assets by accelerating receivables collection and managing inventory levels more efficiently.
   • Negotiate longer payment terms with creditors to reduce current liabilities pressure.
   • Consider short-term financing options such as overdraft facilities or invoice financing to bridge liquidity gaps temporarily.

2. Asset Utilization:

   • Review fixed assets for underutilized or non-core assets that could be sold or leased to release cash.
   • Invest in improving operational efficiency to generate healthier cash flows from existing assets.

3. Capital Structure Optimization:

   • Explore options to increase equity capital or long-term debt to reduce reliance on short-term payables.
   • Engage with existing shareholders or external investors for potential capital injections.

4. Operational Improvements:

   • Implement cost control measures to improve profitability and cash generation.
   • Monitor and forecast cash flows regularly to anticipate and mitigate liquidity risks early.

5. Financial Monitoring:

   • Establish regular financial health checks focusing on cash flow, working capital, and solvency ratios.
   • Seek professional financial advice to develop a robust turnaround plan if liquidity issues persist.

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Medical Analogy Summary

Fortuna Solutions Ltd is like a patient with a sturdy skeletal frame (fixed assets) but suffering from poor circulation (cash flow issues) and low energy reserves (working capital). The company remains "alive" but requires urgent lifestyle changes and medical intervention (financial restructuring and liquidity management) to avoid potential collapse.

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