HM DISTRIBUTERS LTD

Executive Summary

HM DISTRIBUTERS LTD demonstrates stable but limited financial strength typical of a micro-entity with a small equity base and manageable short-term liquidity. While the company shows no immediate distress, its reliance on medium-term liabilities and low net assets highlight vulnerabilities requiring prudent financial management and equity strengthening. Focused actions on debt management, asset efficiency, and capital enhancement will support healthy growth and resilience.

HM DISTRIBUTERS LTD - Analysis Report

Company Number: SC690931

Analysis Date: 2025-07-29 20:54 UTC

Financial Health Assessment Report for HM DISTRIBUTERS LTD
Date: Financial Year Ending 31 March 2024

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1. Financial Health Score: C+

Explanation:
HM DISTRIBUTERS LTD shows a stable but modest financial position typical of a micro-entity in an early stage of operations (incorporated 2021). The company has positive net assets but a relatively low equity base of £1,999. The presence of significant long-term liabilities compared to assets suggests some financial leverage. Overall, the company is not exhibiting acute distress but has some symptoms that require monitoring and management to ensure sustainable growth.

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2. Key Vital Signs

Metric	2024 Value	Interpretation
Fixed Assets	£9,221	Modest investment in long-term assets, slightly decreased from prior year—indicates limited capital intensive operations.
Current Assets	£8,595	Declined from prior year—may point to reduced liquidity or slower turnover of short-term resources.
Current Liabilities	£15,150	Substantial short-term obligations; exceeds current assets, but Net Current Assets reported positive at £7,928 (likely due to creditor classification).
Net Current Assets	£7,928	Positive working capital, indicating the company can cover its short-term liabilities with current assets—healthy cash flow symptom.
Total Net Assets	£1,999	Low net equity relative to liabilities; suggests limited buffer against financial shocks.
Share Capital	£100	Very low share capital, common in micro entities but limits capital raising flexibility.
Employees	1	Very small workforce, consistent with micro-entity status.

Additional Notes:

• The company has maintained consistent net assets around £2,000 over the past three years, indicating stable but minimal accumulated reserves.
• There is a notable classification of creditors "falling due after more than one year" as £15,150, which is significant for a company of this size and could indicate medium-term borrowing or deferred payments.

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3. Diagnosis: Financial Condition Overview

HM DISTRIBUTERS LTD’s financial "vital signs" show a business in early development with a stable but thin capital base. The positive net current assets suggest it is managing short-term liquidity well, a "healthy cash flow" sign. However, the relatively low net assets and presence of medium-to-long term liabilities indicate limited financial resilience—akin to a patient with a low reserve capacity.

The decline in fixed and current assets from prior year may reflect operational adjustments or slower growth. The company's reliance on external creditors (medium-term liabilities) suggests it is financing operations through debt rather than equity injections, which can be risky if cash flows falter.

The micro-entity status and small workforce limit complexity, but also restrict economies of scale and capacity to absorb shocks. The director who holds full control may provide agile decision-making but also concentrates risk.

In summary, the company is financially stable but vulnerable to external shocks or downturns due to limited equity and moderate leverage. It’s exhibiting symptoms akin to a patient with manageable but chronic conditions requiring attention.

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4. Recommendations: Steps to Improve Financial Wellness

1. Strengthen Equity Base:
   Consider increasing share capital or retaining more earnings to build net asset reserves. This improves the company’s "immune system" against financial stress.

2. Manage Debt Levels:
   Review medium and long-term liabilities to ensure they are manageable relative to cash flow. Refinancing or negotiating better terms could reduce pressure.

3. Improve Asset Utilization:
   Investigate the decline in current and fixed assets to understand operational changes. Efficient use of assets enhances profitability and liquidity.

4. Monitor Cash Flow Closely:
   Maintain positive net current assets and ensure timely collection of receivables and management of payables to avoid liquidity strain.

5. Explore Growth Opportunities:
   With a small workforce and limited capital, focus on niche markets or services with higher margins to improve profitability without heavy capital investment.

6. Regular Financial Review:
   Implement periodic financial health checks to catch early warning signs—like declining liquidity or rising debts—and take corrective measures promptly.

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