Company Number: 13112101

Analysis Date: 2025-07-20 12:25 UTC

Financial Health Assessment Report for Hinamoray Ltd (as of 31 January 2024)

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1. Financial Health Score: C

Explanation:
Hinamoray Ltd exhibits some signs of financial instability, particularly in working capital management, but also shows recent improvement in net assets. The company’s current liabilities consistently exceed its current assets, indicating a liquidity strain ("symptoms of financial distress"). However, the increase in net assets and reduction in net current liabilities compared to the prior year provide a cautiously optimistic outlook. Overall, the company is not in immediate danger but needs to address liquidity and operational cash flow issues to improve its financial wellness.

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2. Key Vital Signs: Critical Metrics & Interpretation

Metric	2024 (£)	2023 (£)	Interpretation
Fixed Assets	160,161	222,426	Decrease suggests disposal or impairment of long-term assets, reducing asset base.
Current Assets	67,313	9,055	Significant increase indicates improved liquidity position or collection of receivables.
Current Liabilities	130,081	149,982	Slight improvement, but remains high compared to current assets, indicating liquidity pressure.
Net Current Assets	-62,768	-140,927	Negative working capital (current assets < current liabilities) signals cash flow constraints.
Creditors > 1 year	72,310	72,310	Long-term debt stable, manageable but must be serviced timely.
Net Assets (Shareholders Funds)	24,933	8,930	Increase reflects accumulation of retained earnings or capital injection, a positive sign.
Share Capital	100	100	Minimal paid-up capital, typical for micro-entities, but limits financial cushion.
Employees	0	0	No employees, possibly indicating a holdings or property management business model.

Financial Ratios and Insights:

• Liquidity (Current Ratio):
  2024: 67,313 / 130,081 ≈ 0.52 (Very low)
  2023: 9,055 / 149,982 ≈ 0.06 (Extremely low)
  Interpretation: A healthy current ratio is typically above 1.0, meaning the company can cover short-term obligations. Here, it indicates a "symptom of cash flow distress," but improving in 2024.

• Net Asset Growth:
  Increased from £8,930 to £24,933, showing strengthening equity base.

• Asset Utilisation:
  Fixed assets decreased by ~28% year-on-year, possibly due to sales or write-downs, which could impact future income generation.

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

• Liquidity Concerns: The company’s negative net current assets over multiple years suggest ongoing cash flow challenges, akin to a patient with a chronic condition needing closer monitoring. Despite improvements in 2024, the current ratio below 1 indicates a risk that the company may struggle to meet short-term obligations without additional cash inflows or refinancing.

• Asset Management: The decline in fixed assets, from £222k to £160k, points to asset disposals or impairments. This could be a strategic move to raise cash or an indicator of asset underutilization.

• Capital Structure: The company has a stable long-term creditor position and has increased net assets, indicating some financial resilience. However, the very low share capital and minimal equity cushion mean the company is vulnerable to shocks.

• Operational Model: With no employees, Hinamoray Ltd appears to function as a property holding or management company, relying on asset income rather than operational turnover. This might explain limited working capital but also means cash flow depends heavily on rental income or asset sales.

• Overall Assessment: The company is akin to a patient showing symptoms of liquidity strain but responding positively to treatment, with improved net assets and better current asset levels. The diagnosis is "financially fragile but stabilizing."

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4. Recommendations: Actions to Improve Financial Wellness

1. Improve Liquidity Management:

   • Accelerate collection of receivables or seek advance payments where possible.
   • Negotiate longer payment terms with creditors to improve working capital balance.
   • Explore short-term financing options or overdraft facilities to smooth cash flow.

2. Asset Review:

   • Conduct a thorough review of fixed assets to identify non-core or underperforming assets for possible disposal to raise cash.
   • Invest in assets that can generate stable rental income or capital gains to support cash flow.

3. Capital Infusion:

   • Consider increasing share capital or securing additional equity investment to strengthen the balance sheet and provide a financial buffer.

4. Cost Control:

   • Maintain low operating expenses given the absence of employees; ensure minimal overhead to conserve cash.

5. Strategic Planning:

   • Develop a cash flow forecast to anticipate liquidity needs and plan accordingly.
   • Diversify income streams if feasible to reduce reliance on asset sales or rental income alone.

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