Financial Health Assessment for IS SPASOV SERVICES LTD

1. Financial Health Score: B

Explanation:
The company demonstrates solid improvement in liquidity and net assets over recent years, indicating a generally stable financial condition. However, the relatively modest scale of operations and limited equity base suggest room for strengthening. The score B reflects a "healthy but still growing" financial state typical for a young private limited company in freight transport.

2. Key Vital Signs

3. Diagnosis

• Liquidity and Cash Flow: The company has a strong cash position (£6,059) and positive net current assets (£3,254), which are vital "vital signs" indicating it can meet immediate financial obligations without distress. The almost negligible debtors balance is an excellent symptom showing efficient cash collection and no receivables backlog.

• Solvency and Capital Structure: Net assets have grown over the past few years from £295 in 2024 to £3,254 in 2025, reflecting either retained profits or capital injections. This improvement suggests the company is gradually building a stronger equity base, reducing financial risk.

• Operational Stability: The average number of employees has slightly decreased from 4 to 3, which might represent operational scaling or efficiency adjustments. The company operates in freight transport by road (SIC 49410), a sector with moderate working capital needs.

• Risks and Observations:

  • The share capital remains minimal at £1, implying limited shareholder funding and potential reliance on director’s loans (noted £1,704 in current liabilities). This is a common but slightly risky symptom because it indicates dependence on internal financing rather than external equity.
  • The company has taken advantage of audit exemption, typical for small companies, but this means external scrutiny is limited.
  • Profit and Loss figures are not disclosed, which limits insight into profitability trends but the increase in net assets suggests accumulated retained earnings.

4. Recommendations

• Strengthen Capital Base: Consider increasing share capital or attracting external equity to reduce reliance on director loans and enhance financial resilience.

• Maintain Strong Cash Reserves: Continue to monitor cash flow closely to sustain the "healthy cash flow pulse," especially given the cyclical nature of freight transport.

• Profitability Transparency: Although audit exemption applies, consider voluntary external review or detailed internal reporting to enhance transparency for potential lenders or investors.

• Manage Working Capital Efficiently: Keep a close watch on current liabilities, particularly director loans and wages, to avoid liquidity strain as the company grows.

• Employee and Operational Efficiency: Assess staffing levels relative to business volume to optimize operational costs without compromising service quality.

Executive Summary