HNE CONSULTANTS LTD

Executive Summary

HNE CONSULTANTS LTD displays a strong and healthy financial position marked by robust liquidity, growing equity, and effective debtor management. The company's financial health is solid with manageable liabilities and investments that support operational growth. Continuous monitoring of longer-term obligations and maintaining cash flow discipline will safeguard ongoing financial wellness.

HNE CONSULTANTS LTD - Analysis Report

Company Number: SC705970

Analysis Date: 2025-07-20 16:39 UTC

Financial Health Assessment for HNE CONSULTANTS LTD as of 31 August 2024

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1. Financial Health Score: A-

Explanation:
HNE CONSULTANTS LTD demonstrates a strong financial position with solid liquidity and a stable equity base. The company has healthy working capital, a growing net asset base, and manageable liabilities. Minor caution stems from the introduction of longer-term finance lease obligations, which increase financial leverage but remain within manageable limits given current assets and cash reserves.

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2. Key Vital Signs

Metric	2024 Value (£)	Interpretation
Fixed Assets	36,712	Introduction of tangible assets (motor vehicles) indicates investment in operations.
Current Assets	235,843	Strong short-term asset base, increased from prior year.
Cash Balance	191,647	Very healthy cash flow; significant increase from £63k in 2023. Sign of robust liquidity.
Debtors	44,196	Lower than prior year; reduced credit risk exposure.
Current Liabilities	72,485	Slight increase but well covered by current assets.
Net Current Assets (Working Capital)	163,358	Very comfortable buffer to meet short-term obligations.
Creditors > 1 Year	31,779	Newly introduced finance lease obligations; adds some long-term liabilities.
Net Assets (Equity)	168,291	Growing equity base, reflecting retained profits and asset growth.
Shareholders' Funds	168,291	Strong owner equity supporting the business.

Additional Observations:

• Liquidity: The cash balance increased significantly, indicating strong cash generation or injection. This is a vital sign of a healthy "circulatory system" in the company's finances, meaning it can easily meet immediate obligations.
• Receivables: Reduction in trade debtors and overall debtors suggests improved collections or a shift in sales mix reducing credit risk.
• Liabilities: The rise in finance lease obligations indicates the company has taken on some longer-term debt-like commitments, which can be safely managed given liquidity but requires monitoring.
• Profitability: Although specific profit & loss details are not disclosed, increasing retained earnings (profit and loss account) from £162k to £168k suggests ongoing profitability and healthy "body mass" growth.

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3. Diagnosis: Financial Condition and Underlying Health

The company's financial "vital signs" show a generally healthy condition: strong liquidity ("healthy blood flow" of cash), ample working capital ("nutrients available to operate daily"), and growing equity ("strong skeletal support"). The reduction in debtors and increase in cash reserves indicate good operational efficiency and cash management, akin to a patient demonstrating improved vital function.

The introduction of finance leases is similar to a patient undergoing a controlled increase in workload or external support—manageable but requires ongoing monitoring to avoid overstrain.

No symptoms of financial distress are evident. The company’s balance sheet is well-structured, with current assets comfortably covering current liabilities by more than twice, suggesting no immediate liquidity risk. The rise in fixed assets also demonstrates investment in the company’s operational capacity, which is a positive sign of growth and expansion.

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4. Recommendations: Steps to Enhance Financial Wellness

1. Monitor Long-Term Liabilities:
   Keep a close eye on finance lease obligations and ensure that lease payments and associated costs do not strain cash flow. Consider planning for gradual repayment or refinancing if needed.

2. Maintain or Improve Debtor Management:
   The marked decrease in debtors is positive; continue rigorous credit control to prevent overdue receivables that could impair liquidity.

3. Cash Flow Forecasting:
   Given the large cash reserves, continue detailed cash flow planning to optimize the use of funds—whether through reinvestment, paying down liabilities, or building reserves for future uncertainties.

4. Profit & Loss Transparency:
   Consider voluntary disclosure or internal monitoring of profitability metrics to identify trends early and ensure sustainable earnings growth.

5. Asset Utilization:
   Evaluate the return on the newly acquired fixed assets to ensure they contribute positively to business operations and profitability.

6. Risk Management:
   Monitor any tax or social security obligations (which have increased) to avoid surprises that could disrupt cash flow.

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