IVOLT TECHNICAL SOLUTIONS LTD

Executive Summary

IVOLT TECHNICAL SOLUTIONS LTD exhibits financial distress signs with negative working capital, eroded equity, and critically low cash reserves, indicating liquidity and solvency challenges. Immediate focus on cash flow management, creditor negotiations, and cost control is essential to stabilize operations and improve financial health. Without intervention, the company risks insolvency, but strategic action can restore stability.

IVOLT TECHNICAL SOLUTIONS LTD - Analysis Report

Company Number: 13505858

Analysis Date: 2025-07-19 12:45 UTC

Financial Health Assessment for IVOLT TECHNICAL SOLUTIONS LTD (as of 31 Dec 2023)

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1. Financial Health Score: D

Explanation:
The company shows symptoms of financial distress with net liabilities, negative working capital, and a shrinking cash reserve. The current financial "vital signs" suggest weakened liquidity and solvency, indicating the company is struggling to maintain a healthy financial state.

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2. Key Vital Signs

Metric	2023 Value (£)	Interpretation
Current Assets	38,008	Includes debtors (£37,407) and very low cash (£601). Cash flow appears critically strained.
Current Liabilities	59,146	Obligations falling due within one year exceed current assets by £21,138, indicating liquidity stress.
Net Current Assets (Working Capital)	-21,138	Negative working capital signals the company may struggle to cover short-term debts — a symptom of distress.
Net Assets (Equity)	-13,304	Negative net assets imply liabilities exceed total assets, a serious solvency concern.
Shareholders’ Funds	-13,404	Reflects accumulated losses eroding equity, reducing financial cushion.
Fixed Assets (Tangible)	7,834	Relatively small asset base; limited ability to leverage assets to raise finance or repay creditors.
Trade Debtors	36,935	High debtor balance relative to cash, raising concerns about collection efficiency and cash generation.
Cash at Bank	601	Critically low cash reserves, indicating cash flow is a major issue.
Trade Creditors	36,803	Significant payables; the company may be stretching supplier terms or facing payment delays.

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3. Diagnosis

Symptoms Analysis:

• Liquidity Crunch: The company’s cash on hand is alarmingly low (£601), while trade debtors are high (£37,407). This suggests a "blocked circulation" of cash, akin to poor blood flow in a patient, impairing the company’s ability to meet immediate obligations.
• Negative Working Capital: The current liabilities surpass current assets by over £21k, indicating the company cannot cover short-term debts with available short-term assets. This is a primary symptom of financial distress and potential operational strain.
• Eroded Equity: Net liabilities of over £13k and negative shareholders’ funds indicate the company has accumulated losses, possibly from prior trading deficits or write-downs, weakening the "immune system" (financial buffer) against shocks.
• Asset Base: Tangible fixed assets are limited and have depreciated slightly, offering minimal collateral security to lenders or investors.
• Trade Creditors: The company’s obligations to suppliers remain high, which could pressure supplier relationships and supply chain reliability.
• Operational Scale: The company employs 2 people and operates in retail (online/mail order) and electrical installation, but financials show it is not yet generating robust cash flows or profits.

Underlying Causes:

• Potential collection issues or extended credit terms offered to customers causing high debtors.
• Possible operational inefficiencies or pricing pressures impacting profitability, leading to accumulated retained losses.
• Cash flow management challenges, leading to very low liquidity.

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4. Prognosis

If the current financial state persists without strategic intervention, the company faces a risk of insolvency due to insufficient liquid assets to meet liabilities. However, the presence of ongoing operations and no overdue filings suggests management is maintaining control. The prognosis depends heavily on improving cash flow, managing creditor relationships, and restoring profitability.

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5. Recommendations

To restore financial health and improve cash flow, the company should consider the following actions:

• Strengthen Cash Flow Management:
  • Accelerate collection of trade debtors to convert receivables into cash quickly.
  • Review credit terms and tighten where possible to reduce debtor days.
• Cost Control and Profitability:
  • Analyze operational costs and reduce unnecessary expenses to conserve cash.
  • Evaluate pricing strategy and sales mix to improve margins.
• Liability Management:
  • Negotiate extended payment terms with creditors to ease immediate cash outflows.
  • Prioritize critical payments to maintain supplier confidence and avoid disruption.
• Capital Injection or Financing:
  • Consider equity injection or short-term financing to bolster liquidity and reduce working capital strain.
• Asset Utilization:
  • Review fixed assets for possible sale or leaseback to raise cash if viable.
• Strategic Review:
  • Conduct a business review to identify growth opportunities and operational improvements.
  • Seek professional advice on restructuring options if losses continue.

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Medical Analogy Summary

IVOLT TECHNICAL SOLUTIONS LTD currently presents with classic symptoms of financial distress: "poor circulation" of cash, "weakened immunity" due to negative equity, and "strain" on its operational "organs" (creditors and debtors). Without prompt and targeted treatment—improving cash flow, managing liabilities, and restoring profitability—the company risks "organ failure" (insolvency). Early intervention can stabilize and revive the company's financial health.

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