GOOD MACHINE LTD

Executive Summary

GOOD MACHINE LTD is financially stable with strong liquidity and increasing net assets, showing resilience and growth typical of a healthy micro IT consultancy. The primary concern is its significant long-term debt, which requires strategic management to ensure sustainable financial health. Overall, the company is well-positioned but should focus on reducing leverage and maintaining working capital strength to secure a positive future outlook.

GOOD MACHINE LTD - Analysis Report

Company Number: 12717305

Analysis Date: 2025-07-29 19:11 UTC

Financial Health Assessment Report for GOOD MACHINE LTD (as of 31 July 2024)

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1. Financial Health Score: B

Explanation:
GOOD MACHINE LTD demonstrates a solid financial foundation typical of a micro-entity in the IT consultancy sector. The company shows strong net current assets and a positive net asset position, indicating healthy liquidity and solvency. However, the presence of long-term creditors and relatively modest fixed assets suggests some room for improvement in balancing growth investments with debt management. Overall, the company is financially stable but should monitor its leverage and asset base carefully.

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2. Key Vital Signs (Core Financial Metrics)

Metric	2024 Value	Interpretation
Fixed Assets	£1,815	Very low; typical for a service business with minimal capital investment.
Current Assets	£333,179	Healthy cash and receivables base, strong liquidity.
Current Liabilities	£60,579 (see note below)	Short-term debts manageable relative to current assets.
Net Current Assets	£272,600	Strong working capital indicating ability to meet short-term obligations.
Creditors After One Year	£147,249	Significant long-term liabilities; warrants close monitoring.
Net Assets (Equity)	£127,166	Positive net worth, increased from £88,949 last year showing retained earnings growth.
Share Capital	£100	Nominal share capital, common in micro companies.
Employee Count	2	Small team size consistent with micro category.

Note on Current Liabilities:
The detailed accounts show "Creditors: Amounts Falling Due Within One Year" as £17,201, but the summary from previous years’ data lists £147,249 as current liabilities, which is inconsistent. The explanation from the accounts suggests that the £147,249 is actually "Creditors: Amounts Falling After More Than One Year" (long-term liabilities). Therefore, current liabilities are approximately £17,201, not £60,579. This clarifies a strong liquidity position.

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3. Diagnosis (What the Financial Data Reveals)

• Liquidity: Good Machine Ltd has a "healthy cash flow" proxy in its strong net current assets (£272,600), meaning it can comfortably cover short-term obligations. This indicates no immediate liquidity distress symptoms.

• Solvency: The company’s net assets have increased from £88,949 in 2023 to £127,166 in 2024. This positive trend shows the business is accumulating retained earnings and strengthening its equity base. However, the company carries a significant amount of long-term debt (£147,249), which could be a "symptom of structural leverage." While manageable at present, it requires ongoing monitoring to avoid undue financial strain.

• Asset Base: Fixed assets are minimal, which is typical for a consultancy business relying more on intellectual capital than physical assets. This limits depreciation charges but also means less collateral for borrowing.

• Growth and Stability: The increase in net assets and current assets year-on-year indicates a stable or growing business. The small number of employees and micro-entity classification align with a lean operational model.

• Risk Factors: The significant long-term creditors could represent loans or deferred payments needing attention. The company's ability to service this debt without impairing operational cash flow will be key to sustained health.

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4. Recommendations (Actions to Improve Financial Wellness)

• Monitor and Manage Long-Term Debt:
  Develop a clear plan to reduce or refinance the £147,249 long-term creditors over time. This will reduce financial leverage risk and interest burden, improving solvency.

• Maintain Strong Working Capital:
  Continue to optimize receivables collection and cash management to preserve strong liquidity. Avoid overextension of credit terms to clients.

• Consider Strategic Investment in Fixed Assets:
  While fixed assets are low, investing modestly in technology or equipment could enhance operational efficiency and competitive positioning if justified by business growth.

• Financial Forecasting and Scenario Planning:
  Implement regular budgeting and cash flow forecasting to anticipate any liquidity pressures, especially related to debt servicing.

• Review Capital Structure:
  Assess if additional equity injection might be beneficial to reduce reliance on debt and strengthen the balance sheet.

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Medical Analogy Summary:
GOOD MACHINE LTD shows "healthy cash flow" and a robust "immune system" against short-term financial shocks due to strong current assets. The "symptom of distress" to watch is the considerable long-term debt, which if unchecked, could strain the company's "cardiovascular system" (long-term financial health). With prudent management and debt control, the prognosis remains positive.

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