FUTURE PROOF FENCING LTD

Executive Summary

FUTURE PROOF FENCING LTD is showing early signs of recovery after enduring several years of financial strain characterized by negative working capital and near-insolvent equity levels. However, liquidity remains fragile due to high current liabilities and increased inventory. Focused improvements in working capital management and strengthening equity are critical to stabilizing the company's financial health and ensuring sustainable growth.

FUTURE PROOF FENCING LTD - Analysis Report

Company Number: 12714786

Analysis Date: 2025-07-20 18:58 UTC

Financial Health Assessment: FUTURE PROOF FENCING LTD

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1. Financial Health Score: D

Explanation:
The company shows signs of financial distress with persistent negative net current assets (working capital deficits) over multiple years, although there is a recent slight improvement to a marginal positive net asset position. The score reflects a fragile liquidity position and tight equity base despite some progress. This places the company in a "needs careful monitoring and remedial action" category rather than healthy or stable.

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2. Key Vital Signs

Metric	2024 Figure	Interpretation
Net Current Assets (Working Capital)	-£32,474	Negative working capital means current liabilities exceed current assets; short-term liquidity is weak.
Net Assets (Equity)	£86	Extremely low positive equity, just above break-even; company is almost insolvent on a balance sheet basis.
Cash at Bank	£42,574	Positive cash balance is a vital sign of liquidity but insufficient to cover total current liabilities.
Current Liabilities	£204,550	Large current liabilities compared to current assets signal liquidity pressure.
Stock (Inventory)	£119,557	Inventory has doubled vs prior year, tying up cash and may impact liquidity if slow to convert to sales.
Trade Debtors	£9,945	Low debtor levels relative to inventory; potentially indicating tight credit terms or slow sales recovery.
Share Capital	£2	Minimal paid-up capital; company relies heavily on retained earnings or external financing.
Profit and Loss Account	£84	Small positive retained earnings after years in negative territory; a sign of recent modest profitability.

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3. Diagnosis: Underlying Financial Health

• Liquidity Symptoms:
  The company exhibits symptoms of liquidity strain, with current liabilities significantly outpacing current assets for several years. Although the gap narrowed in 2024, a negative working capital "fever" persists, indicating ongoing pressure to meet short-term obligations.

• Asset Management:
  Inventory has increased substantially, which may indicate stockpiling or slow-moving goods, potentially tying up cash. The modest increase in trade debtors is positive but still low compared to inventory. The company needs to convert stock to cash more efficiently to relieve liquidity stress.

• Solvency and Equity:
  The near-zero net asset figure after years of negative equity suggests the company has been effectively "ill" from a solvency standpoint but may be on a path to recovery. The minimal share capital means equity cushion is thin, increasing vulnerability to external shocks.

• Profitability and Cash Flow:
  While profitability details are not disclosed, the slight positive retained earnings hint at some recent operational improvement. Cash levels have risen, a "healthy pulse" indicating better cash flow management or capital injections, but the high current liabilities need careful management.

• Leverage and Obligations:
  Finance lease obligations have decreased, which is positive, but overall creditor balances remain high. The company must ensure it can service these debts without exacerbating liquidity constraints.

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4. Recommendations: Steps to Improve Financial Wellness

• Improve Working Capital Management:

  • Accelerate inventory turnover by reviewing stock purchasing and sales strategies to free up cash tied in stock.
  • Tighten credit control to reduce debtor days and improve cash inflows.
  • Negotiate extended payment terms with suppliers to balance out cash outflows.

• Increase Equity Base:

  • Consider injecting additional shareholder capital or retaining profits to build a stronger equity buffer against financial shocks.

• Enhance Cash Flow Monitoring:

  • Implement rigorous cash flow forecasting to anticipate liquidity crunches and plan financing accordingly.
  • Explore short-term financing options like overdrafts or invoice discounting as a liquidity bridge if needed.

• Cost Control and Profitability:

  • Review operational costs and overheads to improve margins and profitability, supporting positive retained earnings growth.

• Financial Reporting and Transparency:

  • Maintain timely and accurate financial filings to build stakeholder confidence and access to financing if required.

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Medical Analogy Summary:

FUTURE PROOF FENCING LTD currently exhibits symptoms akin to a patient with a "weak pulse" in liquidity and "low blood pressure" in equity capital. The "working capital fever" is high, indicating stress in meeting short-term obligations. While recent improvements signal some recovery, the company remains in a precarious state requiring immediate intervention to stabilize its financial "vitals" and strengthen its resilience against future shocks.

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