H3 CONSULTING LIMITED

Executive Summary

H3 Consulting Limited demonstrates moderate financial strength with positive net assets and increased cash balances, but the sharp rise in current liabilities poses a potential liquidity risk. Given its short trading history and evolving financial position, credit approval should be conditional on further assurance of cash flow stability and management of short-term obligations. Ongoing monitoring of working capital and equity levels is essential to ensure continued creditworthiness.

H3 CONSULTING LIMITED - Analysis Report

Company Number: 14058061

Analysis Date: 2025-07-29 16:43 UTC

1. Credit Opinion: CONDITIONAL APPROVAL
   H3 Consulting Limited is a newly incorporated private limited company engaged in information technology consultancy (SIC 62020). The company is active and compliant with filing deadlines, with no overdue accounts or confirmation statements. However, the financials show a decline in net assets from £31,906 in 2023 to £24,634 in 2024, driven by increased current liabilities more than doubling from £33,563 to £74,860. While the company holds a reasonable cash balance of £82,245, the rise in short-term liabilities suggests increased short-term financial obligations that require monitoring. Given the limited operating history (just over two years) and modest scale, credit approval should be conditional on confirmation of stable or improving cash flows and clarification of the nature and timing of current liabilities.

2. Financial Strength:
   The balance sheet shows total net assets of £24,634, down from £31,906 the prior year, indicating a weakening equity base. Tangible fixed assets are minimal (£828) and largely computer equipment, consistent with an IT consultancy. Current assets (£98,666) mainly comprise cash (£82,245) and debtors (£16,421). Current liabilities have increased sharply, reducing net current assets from £31,563 to £23,806. The gearing level is low as there is no long-term debt reported. Overall, the company is lightly capitalized with a small equity base but maintains positive net assets and no reported long-term borrowings.

3. Cash Flow Assessment:
   Cash at bank and in hand has increased significantly from £44,131 to £82,245, suggesting improved liquidity. Debtors have decreased, which may indicate better collections or reduced sales on credit terms. However, the doubling of current liabilities to £74,860 from £33,563 raises concerns about short-term cash outflows and working capital management. The net current assets remain positive, but the margin has narrowed. The company’s ability to meet short-term obligations appears adequate currently but requires close attention, especially given the rise in liabilities.

4. Monitoring Points:

• Continued monitoring of current liabilities and their composition to assess liquidity risk.
• Verification of cash flow sustainability, particularly the ability to convert debtors to cash promptly.
• Watch for any further declines in net assets or equity, which could impair creditworthiness.
• Confirm no contingent liabilities or off-balance sheet exposures.
• Track business growth and profitability trends as reported in subsequent filings.
• Management’s ability to control costs and maintain or grow cash balances.

Executive Summary:
H3 Consulting Limited is a small, active IT consultancy with modest net assets and improving cash balances but a significant increase in current liabilities that warrants caution. The company’s short operating history and rising short-term obligations suggest conditional credit approval pending verification of stable cash flows and effective working capital management. Regular monitoring of liquidity and equity trends is recommended to mitigate risk.