Company Number: 13446695

Analysis Date: 2025-07-20 18:34 UTC

Financial Health Assessment for INVERSIO

---

1. Financial Health Score: B+

INVERSIO demonstrates a generally robust financial condition with strong asset backing and positive profitability trends. However, some caution is warranted due to the increased debtor days and modest liquidity buffers relative to current liabilities. The B+ grade reflects a healthy but not flawless financial state where strategic action can further improve resilience.

---

2. Key Vital Signs

• Net Assets: £18.05 million (2023) — A strong and stable net asset base indicating solid capital foundation.
• Shareholders’ Funds: £26.01 million (2023) — Reflects significant equity investment and retained earnings, which is a positive equity "heart" pumping strength into the business.
• Fixed Assets: £15.76 million — Represents substantial investment in long-term resources, showing a solid asset “skeleton” supporting operations.
• Current Assets: £4.80 million vs. Current Liabilities: £2.50 million — Current ratio approx. 1.92:1, indicating more than adequate short-term assets to cover immediate liabilities, a “healthy circulation” of working capital.
• Cash on Hand: £978,008 — Ample cash reserves provide liquidity to meet urgent obligations, akin to having emergency funds.
• Debtor Days: 66 days (increased from 65 days in 2022) — A slightly rising trend in the time taken to collect receivables, signaling a mild symptom of collection strain.
• Turnover Growth: £44.9m in 2023 vs. £43.1m in 2022 — Positive top-line growth showing expanding business activity.
• Gross Profit Margin: 38% (up from 32%) — Improvement in profitability, indicating better cost control and pricing power.
• Net Profit Margin: 11% (up from 7%) — Healthy bottom-line improvement, reflecting operational efficiency and positive cash flow generation.
• Dividend Payment: £939,850 paid in 2023 — Demonstrates ability to return value to shareholders while retaining sufficient earnings for growth.

---

3. Diagnosis

INVERSIO’s financial vitals show a company in good health with effective management of its assets and liabilities. The firm’s strong fixed asset base and equity cushion are akin to a sturdy frame and strong heart, supporting ongoing business activities. Profit margins are improving, which is a sign of a well-functioning metabolism converting sales into profit.

However, the slight increase in debtor days points to a mild symptom of cash flow strain — slower collection could eventually impact liquidity if not addressed. The current ratio remains strong but slightly lower than the previously reported 2.5:1 in the strategic report, indicating some tightening of working capital management.

The company’s strategic moves, including acquisitions and disposals, show an active approach to portfolio management, which could introduce both opportunities and risks. The disposal of subsidiary undertakings in January 2025 suggests a shift in business focus and potential for reallocation of resources.

The auditor’s report confirms no material misstatements and supports the directors’ going concern assumption, reinforcing confidence in financial stability.

---

4. Recommendations

• Improve Debtor Management: Tighten credit control policies to reduce debtor days. This will ease cash flow and reduce the risk of bad debts — akin to clearing arterial blockages for better circulation.
• Maintain Healthy Liquidity Buffers: Continue to monitor cash reserves vigilantly and consider holding slightly higher cash or liquid assets to guard against unexpected shocks.
• Leverage Profitability Gains: Use improved margins to reinvest in innovation and product development, sustaining the company’s competitive edge and growth momentum.
• Monitor Post-Disposal Impact: With the recent disposal of subsidiaries, closely track changes in cash flow and earnings to ensure financial health remains stable.
• Risk Management: Stay alert to external risks such as supply chain disruptions and currency fluctuations mentioned by directors. Consider hedging strategies or supplier diversification to mitigate these.
• Regular KPI Tracking: Continue rigorous monitoring of KPIs, including turnover, margins, debtor days, and current ratio, to provide early warning signs of distress.

---

Summary

INVERSIO is in a generally healthy financial state with strong asset backing and improving profitability. While its liquidity and working capital position remain solid, mild symptoms such as increased debtor days warrant attention to maintain healthy cash flow. The company’s strategic realignments offer future growth potential but require diligent financial oversight.