FORWARD MANAGEMENT SYSTEMS LTD

Executive Summary

Forward Management Systems Ltd is currently solvent with increasing cash reserves but faces challenges from rising short-term liabilities and declining equity, signaling cautious financial health. To prevent potential liquidity stress, the company should focus on improving cash flow management, reducing liabilities, and restoring profitability. Timely monitoring and possible capital injection will strengthen financial resilience for future growth.

FORWARD MANAGEMENT SYSTEMS LTD - Analysis Report

Company Number: 14253011

Analysis Date: 2025-07-20 14:10 UTC

Financial Health Assessment of Forward Management Systems Ltd (FYE 31 July 2024)

---

1. Financial Health Score: C

Explanation:
The company shows a modest but declining net asset base and working capital, with limited fixed assets and a small equity base. Current liabilities, particularly corporation tax and director's loan account, have increased significantly, indicating possible liquidity pressures. While the company remains solvent and active, the downward trend in net assets and increased short-term debts signal caution, warranting a "C" grade suggesting fair but vulnerable financial health.

---

2. Key Vital Signs

Metric	2024 Value (£)	2023 Value (£)	Interpretation
Fixed Assets	538	718	Minimal investment in long-term assets; slight decrease indicates normal depreciation.
Current Assets (Cash)	9,055	5,547	Cash position increased, which is a positive sign of liquidity.
Current Liabilities	6,344	1,073	Sharp increase mainly due to corporation tax and director's loan; potential liquidity strain.
Net Current Assets	2,711	4,474	Declined, indicating working capital is tightening—less buffer for day-to-day operations.
Net Assets (Equity)	3,249	5,192	Declining net worth signals accumulated losses or withdrawals reducing financial strength.
Share Capital	1	1	Nominal share capital, typical for small private companies.
Profit & Loss Reserve	3,248	5,191	Declining retained earnings; possibly reflecting losses or distributions.
Average Number of Employees	1	1	Very small workforce, typical for a consultancy/startup.

---

3. Symptoms Analysis & Diagnosis

• Liquidity and Cash Flow:
  The company maintains a healthy "cash at bank" position (£9,055), which is a vital sign of liquidity "pulse." However, the significant rise in current liabilities from £1,073 to £6,344—particularly corporation tax (£4,887) and director's loan account (£1,456)—is a symptom of potential short-term financial stress or timing differences in tax payments and director reimbursements.

• Working Capital:
  Net current assets have reduced by nearly 40%, showing less short-term cushion. This tightening working capital may constrain the company’s ability to meet unexpected expenses or invest in growth.

• Asset Base and Capital Structure:
  The company’s fixed assets are minimal and depreciating, reflecting its nature as a service/consultancy business requiring limited physical assets. The small equity base (£3,249) and falling retained earnings suggest that the company might have incurred losses or made distributions, which weakens its financial "immune system."

• Profitability and Reserves:
  The reduction in profit and loss reserves indicates the company might be experiencing either operational losses or shareholder withdrawals. Since profit and loss account details are not fully provided, one cannot definitively identify profitability, but the shrinking reserves are a warning symptom.

• Company Size and Industry Context:
  As a micro/small private limited company engaged in management consultancy (SIC 70229), it is typical to have limited assets and a lean structure. However, the increasing liabilities and shrinking equity suggest caution is warranted.

---

4. Prognosis

If the current trend of increasing liabilities and decreasing net assets continues, the company may face liquidity issues that could impair its ability to pay debts on time, which is a "symptom of distress." Without enhanced cash flow management or capital injection, there is a risk that financial health may deteriorate further, potentially leading to solvency challenges. However, the positive cash increase and no overdue filings indicate management is maintaining compliance and operational oversight.

---

5. Recommendations

• Improve Cash Flow Management:
  Closely monitor timing of corporation tax payments and seek to spread tax liabilities if possible. Maintain or increase cash reserves to buffer against liabilities maturing within one year.

• Reduce Current Liabilities:
  Consider repaying or restructuring director’s loan to reduce short-term creditor pressure. Negotiate payment terms with creditors to avoid liquidity crunch.

• Increase Profitability:
  Review cost structures and pricing strategies to restore profitability and rebuild reserves. Detailed profit and loss analysis is recommended.

• Capital Injection:
  Explore options for additional equity or external financing to strengthen the balance sheet and support operations.

• Regular Financial Monitoring:
  Establish monthly financial review processes, focusing on working capital and liquidity indicators to detect early signs of financial stress.

• Maintain Compliance:
  Continue timely filing of accounts and confirmation statements to avoid penalties and maintain good standing.

---

Summary in Medical Analogy

Forward Management Systems Ltd shows a "healthy cash flow heartbeat" with increasing cash but exhibits "symptoms of financial distress" in the form of rising short-term liabilities and "weakened financial immunity" due to shrinking equity and reserves. Immediate attention to liquidity management and profitability is essential to restore robust financial health and prevent deterioration.

---