HEADSTAR LIMITED

Executive Summary

HEADSTAR LIMITED maintains a solid financial foundation with growing net assets and improving profitability, signaling good business health. The primary concern is low cash reserves, which calls for enhanced cash flow management to avoid liquidity challenges. Overall, the company’s financial outlook remains positive with opportunities for steady growth.

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Company Analysis

This analysis is opinion only and should not be interpreted as financial advice.

HEADSTAR LIMITED - Analysis Report

Company Number: 12433306

Analysis Date: 2025-07-29 20:09 UTC

Financial Health Assessment of HEADSTAR LIMITED (as of 31 December 2023)


1. Financial Health Score: B

Explanation:
HEADSTAR LIMITED exhibits a solid financial position with strong net assets and positive working capital. The business shows signs of healthy growth in equity and net assets over recent years, indicating resilience and stability. However, moderate levels of debt and relatively low cash balances introduce some liquidity caution, preventing a top-tier score.


2. Key Vital Signs (Core Financial Metrics and Interpretation):

Metric Value (2023) Interpretation
Net Assets £474,579 Reflects solid shareholder equity, showing business value retained after liabilities.
Working Capital (Net Current Assets) £91,691 Positive and improved from prior year; indicates the company can meet short-term obligations.
Cash at Bank £13,865 Low cash reserves relative to current liabilities; potential "symptom" of tight liquidity.
Debtors (Trade & Group) £574,809 Large receivables balance; implies good sales but potential risk if collections are delayed.
Current Liabilities £496,983 Significant short-term obligations; manageable due to positive working capital but needs monitoring.
Long-Term Debt £95,833 Moderate long-term debt level; manageable but adds financial burden.
Profit & Loss Reserves £17,860 (positive, improved from previous negative balance) Indicates recent profitability or retained earnings recovery, a healthy sign.
Share Capital £1,040 Minimal share capital, typical for a private limited company; equity built mainly through retained earnings and share premium.

3. Diagnosis: What the Financial Data Reveals About Business Health

HEADSTAR LIMITED’s financial "vitals" depict a company in reasonably good health with a robust equity base and improving profitability signals. The positive working capital shows the company can cover its immediate debts, which is akin to having a stable pulse and good blood circulation in a patient.

The company’s goodwill (intangible assets) is significant (£465k), reflecting past acquisitions or business value beyond tangible assets. This goodwill is systematically amortised, indicating the company prudently accounts for potential asset impairments.

Cash position is low, akin to having a lower "fluid volume" in the body. This is a symptom that, while the company currently meets obligations, it must carefully manage cash inflows and outflows to avoid liquidity distress. The high debtor balance suggests reliance on timely customer payments; delays here could strain cash flow.

Debt levels, both short and long term, are moderate. The company’s ability to service these debts appears sufficient, but any sudden income interruptions could pose risks. The consistent number of employees (15) and stable operational scale support steady operations without signs of distress.

Director changes have occurred recently but no indication of governance issues or disqualifications, which is positive for management stability.


4. Recommendations: Specific Actions to Improve Financial Wellness

  • Enhance Cash Flow Management:
    Focus on accelerating debtor collections and optimizing payment terms with suppliers to increase cash reserves, reducing liquidity risk symptoms.

  • Monitor Debt Levels and Refinancing Options:
    Explore refinancing long-term debt to more favourable terms or consider reducing debt to lower financial burden and improve net cash flow.

  • Continue Profitability Improvement:
    Maintain or grow profit margins to build retained earnings further, which strengthens the company’s financial "immune system."

  • Regular Financial Health Reviews:
    Conduct quarterly financial reviews focusing on working capital dynamics and cash flow forecasts to detect early warning signs of distress.

  • Consider Diversification or Expansion:
    Given the company’s stable base and positive equity, evaluate opportunities for strategic growth to reduce reliance on key clients and spread risk.

  • Governance and Leadership Stability:
    Ensure smooth transition and onboarding of directors to maintain strong governance and strategic continuity.


Executive Summary

HEADSTAR LIMITED presents a financially stable profile with strong equity growth and positive working capital, indicating good overall health. The main symptom to watch is low cash reserves relative to liabilities, suggesting cautious liquidity management is necessary. With prudent cash flow improvements and debt management, the company’s prognosis for continued stability and growth is favourable.


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