IEP LEARNING ACADEMY LIMITED

Executive Summary

IEP LEARNING ACADEMY LIMITED is experiencing significant liquidity and solvency challenges, reflected in negative working capital and shareholders' funds despite moderate revenue growth. Immediate focus on cash flow improvement, cost control, and potential capital infusion is crucial to reverse the downward trend and stabilize the company’s financial health.

IEP LEARNING ACADEMY LIMITED - Analysis Report

Company Number: 13610071

Analysis Date: 2025-07-29 12:25 UTC

Financial Health Assessment for IEP LEARNING ACADEMY LIMITED

---

1. Financial Health Score: D

Explanation:
The company is currently exhibiting signs of financial distress, primarily due to large negative net current assets and negative shareholders' funds. The rapid growth in liabilities relative to assets is concerning, indicating liquidity issues and potential solvency risk. The score "D" reflects a condition where the company is struggling to maintain a healthy financial position but is not yet in immediate failure or insolvency.

---

2. Key Vital Signs

Metric	2024 Value	Interpretation
Turnover	£141,869	Moderate revenue generation for a young company.
Fixed Assets (Intangible)	£39,360	Investment in intellectual property, amortised over 4 years.
Current Assets	£74,436	Includes cash (£3,438) and debtors (£70,998).
Current Liabilities	£200,445	Significant short-term obligations, increased sharply from prior year.
Net Current Assets	-£126,009	Negative working capital, indicating liquidity strain ("symptom of distress").
Net Assets / Shareholders' Funds	-£86,649	Negative equity, showing accumulated losses and funding gap.
Cash on Hand	£3,438	Very low cash reserves, raising concerns about cash flow health.
Debtors	£70,998	High receivables; potential cash flow timing issues or credit risk.
Employees	6 (average)	Growth from 4 employees may increase operating costs.

---

3. Diagnosis: Financial Condition Analysis

• Liquidity Crisis: The company has negative net current assets of £126k in 2024, a sharp deterioration from a small negative £9.7k in 2023. This is a critical "vital sign" indicating the business may struggle to meet its short-term liabilities on time. The very low cash balance (£3,438) compared to large current liabilities (£200,445) highlights an unhealthy cash flow situation.

• Solvency Concerns: Negative shareholders' funds of £86,649 indicate the company’s liabilities exceed its total assets. This accumulated deficit suggests ongoing losses or insufficient capital injections to cover losses. The company may be undercapitalized and at risk of insolvency if this trend continues.

• Receivables Concentration: Trade debtors stand at £70,998 while cash is low. This "symptom" suggests potential collection issues or extended credit terms given to customers, which ties up cash and worsens liquidity.

• Growth vs. Financial Stress: Turnover increased from £83k (2021) to £141k (2024), which is positive, but the company's liabilities and net asset position worsened disproportionately. This could mean growth is being financed by credit or delayed payments, causing financial strain.

• Intangible Assets: The company has invested £39,360 in intangible assets (training courses), which are being amortized over four years. This is a positive sign of investing in intellectual capital, but it adds to expenses and needs to generate future income to be sustainable.

• Employee Growth: The headcount increased to 6, which may reflect scaling up operations but also increases fixed overhead costs, impacting cash flow.

• No Overdue Filings: Compliance with filing deadlines is a positive governance indicator.

---

4. Recommendations

To stabilize and improve financial wellness, the company should consider:

• Improve Cash Flow Management:

  • Accelerate collections on trade debtors to convert receivables into cash promptly.
  • Negotiate extended payment terms with creditors to ease short-term cash pressure.

• Control Operating Costs:

  • Review employee and overhead costs in line with revenue growth to prevent cash drain.
  • Consider cost reduction initiatives to preserve cash.

• Capital Injection or Financing:

  • Explore options for equity injection or short-term financing to shore up working capital and restore positive net assets.
  • Avoid excessive reliance on trade creditors or short-term loans which could worsen liquidity.

• Monitor and Manage Credit Risk:

  • Assess the creditworthiness of customers to reduce risk of bad debts.
  • Implement stricter credit control policies.

• Strategic Review:

  • Reassess business model and pricing to improve profitability and cash generation.
  • Use intangible assets effectively to drive revenue growth.

• Regular Financial Monitoring:

  • Establish weekly cash flow forecasts and financial KPIs to detect early symptoms of distress.
  • Engage professional advice if liquidity issues persist.

---

Medical Analogy Summary

The company currently shows "symptoms of distress" with a "weak pulse" in liquidity and "low blood pressure" in cash reserves, signaling financial strain. The "heart" of the business—cash flow—is fragile, and without intervention, the risk of "organ failure" (insolvency) increases. Immediate care through cash flow management and capital support is essential to restore "financial health."

---