Company Number: OC440350

Analysis Date: 2025-07-29 15:40 UTC

Financial Health Assessment of Hunt&Harris Surgery LLP as of 31 March 2024

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1. Financial Health Score: D

Explanation:
The company is currently showing signs of financial distress, indicated by a negative net asset position and significantly negative working capital. While the business remains active with ongoing operations, the balance sheet reveals symptoms of liquidity strain and capital erosion that need urgent attention to restore financial health.

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2. Key Vital Signs

Metric	Value (31 Mar 2024)	Interpretation
Fixed Assets	£21,934	Moderate investment in long-term assets, slightly increased
Current Assets	£28,052	Includes cash and debtors; moderate short-term assets
Cash	£9,471	Relatively low cash buffer compared to liabilities
Debtors	£18,581	Significant amount tied up in receivables
Current Liabilities	£54,698	High short-term obligations, more than double current assets
Net Current Assets (Working Capital)	-£26,646	Negative working capital signals liquidity stress
Net Assets (Equity)	-£4,712	Net liabilities exceed assets, indicating capital erosion
Members’ Loans and Debts	£180,250	High reliance on member financing to support operations
Members’ Capital	-£184,962	Negative capital suggests accumulated losses or drawings

Interpretation:

• Negative working capital is a key symptom of distress; the company may struggle to meet short-term obligations from available liquid assets.
• Net liabilities indicate the company’s total obligations exceed its total assets, a red flag for solvency.
• The high level of members' loans suggests reliance on internal funding to keep the business afloat, possibly masking liquidity issues.
• The increase in fixed assets shows investment but may be illiquid in the short term.
• The debtors balance is quite high; slow collections could exacerbate cash flow problems.

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3. Diagnosis

The financial "vital signs" of Hunt&Harris Surgery LLP reveal a company under financial strain. The negative working capital and net asset deficit are symptomatic of liquidity and solvency challenges. Despite having tangible assets and some cash reserves, the business is dependent on member loans to fund operations, which raises concerns about its financial independence and long-term sustainability.

This pattern may indicate either operational losses or significant drawings by members, reducing the equity base and putting pressure on cash flow. The relatively small team size (2 employees) suggests a micro or small-scale operation, but the financial structure resembles a company grappling with cash flow management and capital adequacy.

Without corrective measures, these symptoms could worsen, leading to difficulties in meeting liabilities, potentially requiring restructuring or external financing.

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4. Recommendations

1. Improve Cash Flow Management:

   • Accelerate debtor collections through tighter credit control.
   • Review payment terms with suppliers to extend current liabilities where possible.
   • Maintain a cash buffer adequate to cover at least 3 months of operational expenses.

2. Reduce Reliance on Member Loans:

   • Consider formalising external financing or equity injection to reduce pressure on members.
   • Explore options for restructuring member loans into longer-term funding.

3. Cost Control and Profitability:

   • Conduct a detailed review of expenses and operational efficiencies to halt any ongoing losses.
   • Evaluate pricing strategies and service offerings to increase turnover and margins.

4. Capital Restructuring:

   • Address the negative capital position by either member capital top-up or reinvestment of profits once profitability improves.
   • Avoid further drawings that could deepen the capital deficit.

5. Regular Financial Monitoring:

   • Implement monthly financial reviews focusing on liquidity indicators and working capital.
   • Use early warning indicators to detect worsening financial health promptly.

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