FS SPECIALISTS LIMITED

Executive Summary

FS SPECIALISTS LIMITED is exhibiting early symptoms of financial distress, mainly liquidity challenges and erosion of equity, reflected in negative working capital and declining net assets. Immediate focus on cash flow management and capital strengthening is essential to avoid deeper financial strain. With timely corrective actions, the company can stabilize its financial health and build resilience.

FS SPECIALISTS LIMITED - Analysis Report

Company Number: 14006075

Analysis Date: 2025-07-29 19:15 UTC

Financial Health Assessment for FS SPECIALISTS LIMITED

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1. Financial Health Score: D

Explanation:
The company exhibits signs of financial strain, primarily due to its negative net current assets in the latest year, indicating liquidity challenges. While it remains active with positive net assets, the downward trend in working capital and net assets signals early symptoms of financial distress. The small scale and micro-entity status limit financial complexity but also restrict financial resilience.

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2. Key Vital Signs

Vital Sign	2024 Value (£)	2023 Value (£)	Interpretation
Fixed Assets	376	502	Minimal investment in long-term assets; stable but very low asset base typical of micro firms.
Current Assets	5,982	9,246	Decline in liquid and short-term assets; reduction weakens short-term financial flexibility.
Current Liabilities	9,788	6,806	Increase in short-term debts owed; raises concerns about ability to meet immediate obligations.
Net Current Assets (Working Capital)	-234	2,440	Shift from positive to negative; symptom of cash flow strain and potential liquidity crisis.
Net Assets (Equity)	142	602	Decline in shareholder funds; indicates erosion of financial buffer and capital base.
Director’s Advance (Receivable)	5,960	5,619	Director loan receivable increasing; may indicate internal financing to support operations.

Interpretation of Vital Signs:

• Healthy cash flow would be reflected in positive working capital; here, the negative figure is a symptom of liquidity stress, meaning the company may struggle to pay its short-term debts with available assets.
• The decline in net assets suggests the company is consuming its equity base, which can be risky if it continues.
• The director's loan as an asset is somewhat positive, indicating funds have been advanced by the director, possibly to alleviate cash shortages. However, this also means the company relies on internal financing rather than generating sufficient operational cash.

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3. Diagnosis

FS SPECIALISTS LIMITED, operating in private security activities, is at an early stage in its financial lifecycle but exhibits clear symptoms of financial stress:

• Liquidity Weakness: Negative working capital is the primary symptom, indicating the company may not have enough short-term assets to cover its liabilities. This can cause operational disruptions if creditors demand payment.
• Declining Equity: The drop in net assets from £602 to £142 signals erosion of the company's financial cushion, increasing vulnerability to shocks.
• Limited Asset Base: Fixed assets are minimal, which is normal for a service-oriented micro-entity, but also limits collateral for borrowing.
• Reliance on Director Funding: The increasing director’s loan suggests the business requires internal support to stay afloat, which is a common stop-gap but not a sustainable long-term solution.
• Micro Entity Status: While this simplifies reporting, it limits access to capital markets and may restrict growth potential.

Overall, the company shows early signs of financial distress, primarily related to liquidity and capital erosion. While not yet in crisis, without intervention, these symptoms could worsen.

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4. Recommendations

To improve financial wellness and reverse current negative trends, FS SPECIALISTS LIMITED should consider the following:

1. Improve Liquidity Management:

   • Tighten credit control and accelerate debtor collections.
   • Negotiate longer payment terms with suppliers to reduce current liabilities pressure.
   • Monitor cash flow forecasts closely to anticipate and manage shortfalls.

2. Strengthen Capital Base:

   • Consider equity injection from the director or external investors to rebuild shareholder funds.
   • Review pricing and cost control to restore profitability and retain earnings.

3. Reduce Reliance on Director Advances:

   • While director loans are helpful short-term, the company should aim to generate operational cash flow to fund working capital.
   • Formalize terms of director loans to ensure clarity and compliance.

4. Cost Efficiency and Business Development:

   • Review operational expenses to identify savings without sacrificing service quality.
   • Explore new contracts or markets in the private security sector to increase turnover.

5. Regular Financial Monitoring:

   • Establish monthly financial reviews focusing on liquidity ratios and working capital trends.
   • Seek professional advice if financial stress persists to explore restructuring options.

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