IRON HIVE LTD

Executive Summary

IRON HIVE LTD, a recently incorporated micro-entity operating sports facilities, demonstrates typical early-stage financial strain characterized by negative working capital and net assets. While these are common in start-ups investing in foundational assets, immediate focus on cash flow improvement and balance sheet strengthening is crucial to ensure sustainable growth and avoid liquidity crises.

IRON HIVE LTD - Analysis Report

Company Number: 15196829

Analysis Date: 2025-07-20 16:47 UTC

Financial Health Assessment for IRON HIVE LTD

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1. Financial Health Score: D

Explanation:
IRON HIVE LTD is a micro-entity in its first financial year, with initial operating results showing financial strain. The company exhibits symptoms of liquidity stress and negative equity, indicating early-stage financial instability. While start-ups often face such challenges, current figures suggest the company needs to strengthen its financial position promptly to avoid further deterioration.

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2. Key Vital Signs

Metric	Value (£)	Interpretation
Fixed Assets	36,741	Presence of tangible or intangible long-term assets; a positive foundation but modest in scale.
Current Assets	1,500	Very low short-term assets; indicates limited immediate resources to cover short-term debts.
Current Liabilities	14,731	Debts due within one year; significantly higher than current assets, signaling liquidity issues.
Net Current Assets	-13,231	Negative working capital; "symptom of distress" indicating potential difficulty meeting short-term obligations.
Creditors (Long-term)	25,443	Substantial long-term debts exceeding net assets; pressure to service these liabilities.
Net Assets (Equity)	-2,328	Negative equity ("balance sheet weakness") indicating liabilities exceed assets—an unhealthy sign.
Shareholders’ Funds	-2,328	Mirrors negative net assets; shareholders have an effective deficit in invested capital.
Number of Employees	2	Small team consistent with micro-entity status.

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3. Diagnosis

IRON HIVE LTD is in the nascent phase of business operations, having incorporated in October 2023 and reporting for just over one year. The company shows "symptoms of financial distress" primarily due to negative working capital and negative net assets. This means current liabilities exceed current assets by £13,231, reflecting a liquidity mismatch that may hinder the company’s ability to pay short-term debts promptly.

The negative net assets (-£2,328) indicate the company’s total liabilities surpass its total assets, which can be a warning sign of insolvency risk if not addressed. The £25,443 long-term creditors suggest a reliance on external financing, possibly loans or deferred payments, which the company must manage carefully.

However, these results are not uncommon for a start-up micro-entity investing in fixed assets (£36,741) and establishing operations. The directors have also extended interest-free advances to support the company, showing commitment to bridging liquidity gaps.

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4. Recommendations

• Improve Cash Flow Management:
  Prioritize generating positive operating cash flow to build a healthier current asset base. Consider accelerating receivables collection or negotiating extended payment terms with creditors to ease liquidity pressure.

• Reduce Short-term Liabilities:
  Explore options to refinance current liabilities to longer maturities or convert short-term debts into manageable payment plans, improving working capital.

• Boost Capital Injection:
  Shareholders might consider additional equity funding to restore positive net assets and strengthen the balance sheet "immune system."

• Monitor Fixed Asset Utilization:
  Ensure fixed assets are effectively contributing to revenue generation, as these represent the company’s tangible investment base.

• Cost Control:
  Keep operational costs lean given the small size and early stage; avoid unnecessary expenses that could exacerbate cash flow issues.

• Regular Financial Review:
  Implement monthly financial health checks focusing on liquidity ratios and cash forecasts to catch early warning signs.

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