IDEA FORGE LTD

Executive Summary

IDEA FORGE LTD exhibits stable financial health with positive working capital and net assets, indicating good short-term liquidity and solvency. However, a recent decrease in current assets suggests early warning signs that require careful cash flow management and cost control to maintain financial wellness. With prudent oversight and strategic growth initiatives, the company can strengthen its financial position for a healthy future.

IDEA FORGE LTD - Analysis Report

Company Number: 13454662

Analysis Date: 2025-07-20 18:08 UTC

Financial Health Assessment Report for IDEA FORGE LTD

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1. Financial Health Score: B

Explanation:
IDEA FORGE LTD demonstrates a generally sound financial position with positive net current assets and net assets throughout its operating history since incorporation. The company maintains a stable working capital position, indicating it can cover short-term obligations comfortably. However, the declining current assets and net assets in the latest financial year signal early symptoms that warrant monitoring to prevent future financial strain.

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2. Key Vital Signs

Metric	2024 (£)	2023 (£)	Interpretation
Current Assets	21,097	34,573	Decrease suggests reduced cash or receivables, possibly lower sales or tightening liquidity.
Current Liabilities	7,551	19,622	Significant reduction indicates effective management of short-term debts and obligations.
Net Current Assets	13,546	14,951	Positive and stable working capital — a vital sign of liquidity and operational health.
Net Assets (Shareholders' Funds)	13,546	14,951	Slight decline over the year but remains positive, indicating retained equity and solvency.
Average Number of Employees	1	1	Very small workforce consistent with micro-entity status, low fixed overheads.

Additional Notes:

• The company is classified as a Micro-entity; thus, financial statements are simplified with limited disclosures.
• The sole director and 100% shareholder is Mr. Thomas Richard Sandford, indicating tight control but also concentration risk.

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3. Diagnosis: What the Financial Data Reveals

IDEA FORGE LTD is in a stable but cautious financial state. The company’s balance sheet shows a consistent positive net current assets figure, often described as "healthy cash flow" territory, signifying that it has enough liquid assets to comfortably meet short-term liabilities. This is akin to a patient whose vital signs are generally normal but shows early signs of fatigue.

The noticeable decline in current assets (from £34,573 to £21,097) could be symptomatic of reduced cash inflows, possibly due to slower sales, delayed customer payments, or increased cash outflows. However, the company has effectively reduced its current liabilities sharply (from £19,622 to £7,551), which reflects prudent management of debts or payables.

Net assets have decreased slightly, reflecting a small erosion of equity but remain positive, meaning the company is solvent and not at immediate risk of insolvency.

The small employee base is typical for a micro-entity in software development, suggesting lean operations but potentially limited capacity to scale without additional hires or investment.

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4. Recommendations: Specific Actions to Improve Financial Wellness

• Monitor Cash Flow Closely: The drop in current assets signals a need for vigilant cash flow management. Consider implementing more rigorous credit control and faster collection of receivables to maintain a "healthy cash supply."
• Manage Costs and Liabilities: Continue the effective reduction of current liabilities to avoid liquidity crunches. Negotiating better payment terms with suppliers or deferring non-essential expenses could be beneficial.
• Explore Growth Opportunities: To reverse the decline in net assets, explore avenues to increase sales or diversify income streams. Given the company's software development focus, investing in marketing or product development could boost revenue.
• Consider Financial Buffer: Building a cash reserve or securing a small credit facility can provide a buffer against unexpected expenses or market downturns, akin to having a financial “immune system.”
• Plan for Scale: With only one employee, evaluate the need for additional human resources or outsourcing to sustain growth without overextending finances.
• Regular Financial Reviews: Establish quarterly financial health check-ups to catch any emerging symptoms early and adjust business strategies accordingly.

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