INTERACT DC LIMITED

Executive Summary

INTERACT DC LIMITED exhibits robust financial health with strong liquidity and solvency, reflected in high cash reserves and positive equity. The company operates a capital-light model consistent with IT services, maintaining excellent short-term financial stability. To sustain and enhance growth, management should focus on improving profitability transparency, diversifying assets, and leveraging cash reserves strategically.

INTERACT DC LIMITED - Analysis Report

Company Number: 13014241

Analysis Date: 2025-07-20 14:28 UTC

Financial Health Assessment for INTERACT DC LIMITED (As at 30 September 2024)

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1. Financial Health Score: B

Explanation:
The company demonstrates a generally healthy financial position with strong net current assets and positive net assets, indicating sound liquidity and solvency. However, the relatively small share capital and limited tangible fixed assets suggest some areas for growth and stability improvement. The strong increase in cash reserves is a positive sign, but a high concentration of cash without diversified assets or clear profit and loss account disclosures leaves some room for caution.

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2. Key Vital Signs

Metric	Value (2024)	Interpretation
Net Current Assets (Working Capital)	£109,115	A strong positive working capital, indicating the company can comfortably meet short-term obligations.
Net Assets (Equity)	£110,229	Positive net assets show the company is solvent with assets exceeding liabilities.
Cash at Bank	£131,378	Healthy cash reserves signify very strong liquidity—good for operational stability and flexibility.
Debtors	£3,575	Low trade debtors relative to cash, suggesting prompt collections or limited credit exposure.
Current Liabilities	£25,838	Manageable liabilities compared to assets; no immediate distress signals.
Share Capital	£143	Minimal share capital; typical for small private companies but indicates limited equity buffer.
Profit & Loss Account Reserve	£107,506	Accumulated retained earnings suggest ongoing profitability and retained wealth within the business.
Fixed Assets	£1,114	Very low tangible fixed assets, indicating capital-light operations, common in IT service activities.

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3. Diagnosis: Financial Health and Business Condition

• Liquidity ("Pulse and Breathing"): The company shows a "healthy pulse" of liquidity with cash holdings far exceeding short-term liabilities. This means it has excellent short-term financial flexibility to cover obligations and invest in opportunities.

• Solvency ("Bone Structure"): Positive net assets and shareholders’ funds indicate a robust "bone structure," suggesting the company is solvent and has a strong equity base relative to liabilities. This reduces risk of insolvency.

• Operational Efficiency ("Metabolism"): The significant drop in debtors from £84,712 in 2023 to £3,575 in 2024 implies either improved collection efficiency or a change in related party balances. It’s important to monitor that this is sustainable and not due to reduced sales or shifting of balances.

• Asset Profile ("Muscle and Fat"): The company is capital-light, with limited fixed assets but strong cash reserves. This fits the business model of IT services, which typically require less physical capital. However, reliance on cash suggests cautious management or pending investment.

• Growth & Profitability ("Energy Reserves"): The increase in retained earnings indicates the company has generated profits to build reserves. Absence of a detailed profit and loss account limits insight, but retained earnings growth is a positive sign.

• Governance and Control ("Nervous System"): Multiple directors and a major shareholder controlling 50-75% suggest solid governance, but the presence of a dominant shareholder should be considered for decision-making balance.

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4. Recommendations: Steps to Improve Financial Wellness

1. Enhance Transparency on Profitability

   • Provide fuller disclosure of profit and loss performance to stakeholders to better understand operational results and cash flow generation.

2. Diversify Asset Base

   • Consider investing some cash reserves into strategic fixed assets or technology upgrades to support growth and operational efficiency.

3. Maintain Strong Working Capital Management

   • Ensure continued effective credit control to keep debtors low and cash flow healthy, especially monitoring related party transactions.

4. Strengthen Equity Base

   • Explore opportunities for equity infusion to increase share capital, which can improve financial resilience and support future expansion.

5. Plan for Future Investment

   • Use strong cash reserves proactively for marketing, talent acquisition, or product development to drive growth rather than holding excessive idle cash.

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