INSPIRING POTENTIAL LIMITED

Executive Summary

Inspiring Potential Limited, a newly formed micro-entity, currently faces significant financial challenges with negative net assets and working capital deficits indicating liquidity distress. Immediate focus on securing funding and managing costs is critical to stabilise the company's financial condition and support growth. With proactive management, the company can improve its financial health and prospects.

INSPIRING POTENTIAL LIMITED - Analysis Report

Company Number: 14721320

Analysis Date: 2025-07-20 18:06 UTC

Financial Health Assessment for Inspiring Potential Limited (FY ending 31 March 2024)

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1. Financial Health Score: D

Explanation:
The company is in its infancy (incorporated 2023) and currently exhibits significant financial distress signals. Negative net assets and net current liabilities indicate a fragile financial position. While early-stage companies often face initial losses, this level of deficit lowers the financial health score. Improvement is required to move toward stability.

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2. Key Vital Signs

Metric	Value (£)	Interpretation
Fixed Assets	710	Minimal investment in long-term assets; typical for a startup.
Current Assets	969	Very limited short-term resources; healthy cash reserves are lacking.
Current Liabilities	18,420	Obligations due within one year are substantial relative to assets.
Net Current Assets (Working Capital)	-17,451	Negative working capital — a critical symptom of liquidity distress.
Total Assets less Current Liabilities	-16,741	Indicates total liabilities exceed total assets; a sign of insolvency risk.
Net Assets / Shareholders’ Funds	-16,641	Negative equity; company owes more than it owns, a warning sign.
Number of Employees	1	Sole director/employee; limited operational scale.

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3. Diagnosis

Symptoms Analysis:

• The company shows symptoms of financial distress marked by negative net assets and a large deficit in working capital.
• Negative working capital means the company may struggle to meet short-term obligations without external support or additional financing.
• The micro-entity status and minimal fixed assets suggest the company is at a very early stage or in a development phase with limited operational scale.
• Sole director ownership (Rebecca Alexander) indicates centralized control, which can be agile but also concentrates risk.
• Absence of audit and profit & loss disclosure is typical for micro companies but limits insight into profitability or cash flow trends.

Underlying Causes:

• Initial start-up costs or liabilities may not yet be matched by revenues or capital injection.
• Possible reliance on director loans, unpaid creditors, or deferred payments to fund operations.
• Limited cash reserves increase vulnerability to unexpected expenses or delayed income.

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4. Prognosis

If current trends persist without an injection of funds, increase in revenues, or reduction in liabilities, the company risks escalating financial distress. However, as a micro-entity and newly formed business, the situation may improve rapidly with strategic management, funding, and operational growth.

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5. Recommendations

• Address Liquidity: Secure additional working capital through equity injection, director loans, or external financing to cover short-term liabilities and avoid default.
• Cost Control: Minimise operating expenses and negotiate payment terms with creditors to improve cash flow management.
• Revenue Growth: Focus on developing client base in the education sector (SIC 85590) to generate sustainable income streams.
• Financial Monitoring: Implement regular cash flow forecasting and budgeting to anticipate cash shortages early.
• Seek Professional Advice: Engage a financial advisor or mentor experienced with micro-businesses to plan turnaround strategies.
• Governance: Maintain clear separation of personal and company finances, given sole directorship and ownership, to reduce personal liability risks.

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Medical Analogy Summary

Inspiring Potential Limited exhibits "symptoms of liquidity distress" and "negative equity syndrome," akin to a patient with a weakened cardiovascular system struggling to maintain healthy blood flow (cash flow). Immediate intervention ("capital infusion and cost management") is required to stabilize and improve the company's "financial health." Without treatment, there is a risk of "financial failure," but with prompt care, recovery is possible.

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