HQH GROUP LTD

Executive Summary

HQH GROUP LTD shows a positive turnaround in financial health with improved net assets and working capital, indicating a move away from previous liquidity challenges. While the company maintains a modest capital base and relies on current assets for liquidity, it should focus on strengthening reserves and maintaining tight control on cash flows to ensure ongoing financial stability.

HQH GROUP LTD - Analysis Report

Company Number: 13059056

Analysis Date: 2025-07-20 13:01 UTC

Financial Health Assessment for HQH GROUP LTD

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1. Financial Health Score: B-

Explanation:
HQH GROUP LTD exhibits a recovering financial profile with positive net assets and improving working capital. However, as a micro-entity with relatively low fixed assets and modest share capital, the company’s financial resilience is moderate. The improvement from negative equity to positive shareholders’ funds is promising, but the company still shows signs of past liquidity strain. Hence, a "B-" grade reflects a cautiously positive but still vulnerable financial status.

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2. Key Vital Signs:

Metric	2023 Value (£)	Interpretation
Net Assets (Shareholders’ Funds)	44,220	Positive, indicating net worth is above liabilities – a healthy sign after previous deficits.
Net Current Assets (Working Capital)	42,930	Positive working capital indicates the company can meet short-term debts, a key "healthy cash flow" indicator.
Fixed Assets	2,190	Low level of long-term assets; typical for a micro-entity, but indicates limited capital investment.
Current Liabilities	108,881	Relatively high short-term obligations, but manageable given current assets.
Current Assets	120,685	Adequate liquid assets to cover short-term liabilities, supporting operational liquidity.
Share Capital	99	Minimal capital injected; the company relies heavily on retained earnings and reserves.
Employee Count	7	Small workforce, consistent with micro-entity status.

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3. Diagnosis:

HQH GROUP LTD demonstrates classic "symptoms of financial recovery." After several years of negative net assets and net current liabilities (indicative of liquidity distress), the company has turned a corner as of the latest financial year. The positive net current assets and net assets show the business has strengthened its balance sheet and improved its ability to meet obligations.

The company's reliance on current assets over fixed assets suggests a business model focused on liquidity management rather than capital-intensive operations. The small share capital indicates limited initial funding, but the rise in reserves and shareholders’ funds reflects retained earnings or capital injections improving the financial base.

However, the high current liabilities relative to total assets point to potential ongoing pressure on cash flows. The company must continue managing working capital carefully to avoid "symptoms of cash flow stress" in the future.

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4. Recommendations:

• Strengthen Liquidity Reserves: Maintain or improve the positive net current assets by optimizing receivables and payables management to ensure continued healthy cash flow.

• Capital Injection: Consider increasing share capital or seeking external equity investment to build a stronger capital base, reducing financial vulnerability.

• Asset Utilization Review: Evaluate opportunities for strategic investment in fixed assets that could enhance operational capacity or efficiency, balancing against liquidity needs.

• Cost Control & Profitability Focus: Monitor expenses closely, especially employee-related costs, given the small scale of operations, to sustain profitability and cash generation.

• Regular Financial Monitoring: Implement monthly cash flow forecasting and financial health checks to detect early "symptoms" of financial distress, allowing proactive management.

• Governance and Compliance: Ensure timely filing of accounts and returns, which HQH GROUP LTD currently complies with, to avoid penalties and maintain credibility with stakeholders.

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