INCREMENT CONSULTING 2 LTD
Executive Summary
Increment Consulting 2 Ltd maintains a stable but cautious financial position with positive net assets and working capital, indicating solvency. However, declining cash reserves and retained earnings suggest the need for improved cash flow management and profitability efforts to sustain and improve financial health. Close monitoring and strategic action will be key for future stability and growth.
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This analysis is opinion only and should not be interpreted as financial advice.
INCREMENT CONSULTING 2 LTD - Analysis Report
Financial Health Assessment for INCREMENT CONSULTING 2 LTD
1. Financial Health Score: C
Explanation:
The company shows a stable but modest financial position with positive net assets and working capital, indicating a baseline of financial health. However, the declining cash reserves and lack of employee base signal cautious concern. The business appears solvent but exhibits symptoms of limited scale and possibly constrained operational activity, which tempers the overall health grade.
2. Key Vital Signs
Metric | 2024 Value | 2023 Value | Interpretation |
---|---|---|---|
Current Assets | £17,276 | £22,147 | Reduction in short-term assets, mainly cash |
Cash at Bank | £6,919 | £12,921 | Significant drop in liquid cash "blood flow" |
Debtors | £10,357 | £9,226 | Slight increase in amounts owed by customers |
Current Liabilities | £8,208 | £9,538 | Decrease in short-term debts, easing pressure |
Net Current Assets (Working Capital) | £9,068 | £12,609 | Healthy buffer but shrinking, watch carefully |
Net Assets | £9,068 | £12,609 | Positive equity, but declining "body mass" |
Share Capital | £100 | £100 | Minimal share capital; company likely reliant on internal funds |
Profit & Loss Reserve | £8,968 | £12,509 | Decrease suggests reduced retained earnings or accumulated losses |
Interpretation:
- Working Capital remains positive, indicating the company can cover its short-term debts, a sign of financial "vitality."
- Cash Reserves have dropped by nearly half, which may indicate cash outflows exceeding inflows or delayed collections. Healthy cash flow is critical to avoid liquidity stress.
- Debtors have slightly increased, which could signal longer payment terms or slower customer payments — a symptom to monitor as it may strain cash flow.
- Current Liabilities have decreased, easing immediate financial obligations, which is a positive sign.
- Net assets and retained earnings have declined, suggesting that profitability or capital injections have not kept pace with expenses or withdrawals.
3. Diagnosis: Business Financial Health Overview
INCREMENT CONSULTING 2 LTD is a young, private limited company operating in the management consultancy sector with no employees, indicating a likely sole trader or director-run consultancy. The company's financial "pulse" shows it maintains solvency with a positive net asset base and working capital. However, the shrinking cash reserves and decline in retained earnings act as warning signs of potential "fatigue" in financial resources.
The absence of employees suggests minimal operational complexity but could also limit growth capacity. The company is not audited, filing abridged accounts, common for small-sized entities, but this limits the depth of financial transparency.
Overall, the company is not in distress but shows symptoms of cautious financial health that requires close monitoring to prevent liquidity tightening or erosion of equity.
4. Recommendations for Financial Wellness Improvement
Improve Cash Flow Management:
- Tighten debtor collection processes to accelerate cash inflows.
- Consider negotiating better payment terms with clients to reduce accounts receivable days.
- Maintain a cash buffer to handle unexpected expenses.
Enhance Profitability and Retained Earnings:
- Review pricing models and cost structures to improve margins.
- Explore additional service offerings or clients to increase turnover and profits.
Plan for Growth or Investment:
- If growth is a goal, consider hiring key personnel or outsourcing to expand capacity, which may improve revenue potential but must be balanced against costs.
- Evaluate the necessity and timing of capital injections or loans to support expansion or stabilize liquidity.
Regular Financial Monitoring:
- Establish monthly cash flow forecasts and management reports to detect early warning signs of financial strain.
- Ensure compliance with filing deadlines to avoid penalties and maintain good standing.
Consider Professional Advice:
- Periodic consultation with financial advisors can provide strategic insight and help optimize financial health.
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