JCM CONSULTING SERVICES LIMITED

Executive Summary

JCM CONSULTING SERVICES LIMITED shows signs of financial strain with negative net assets and working capital deficits, indicating liquidity and solvency risks. Immediate focus on cash flow management, cost control, and potential capital injection is crucial to restore financial health. Without corrective action, the company faces a precarious outlook, but its small scale allows room for rapid adjustment.

JCM CONSULTING SERVICES LIMITED - Analysis Report

Company Number: 13510356

Analysis Date: 2025-07-29 15:04 UTC

Financial Health Assessment: JCM CONSULTING SERVICES LIMITED

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1. Financial Health Score: D

Explanation:
The company currently exhibits signs of financial distress with negative net assets and net current liabilities, indicating a fragile financial state. While it remains active, the trend over the last financial year suggests liquidity challenges and an erosion of financial stability.

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2. Key Vital Signs

Metric	2024 (£)	2023 (£)	Interpretation
Fixed Assets	0	500	No long-term assets in 2024; potential loss or disposal of assets, reducing company stability.
Current Assets	36,083	39,699	Slight decrease, indicating a reduction in short-term resources like cash or receivables.
Current Liabilities	40,643	38,575	Increased short-term obligations, raising liquidity pressure.
Net Current Assets (Working Capital)	-4,560	1,124	Shift from positive working capital to negative, signaling difficulty in meeting immediate debts.
Total Assets less Current Liabilities	-4,560	1,624	Negative value points to liabilities exceeding assets; a red flag for solvency.
Net Assets / Shareholders’ Funds	-5,195	989	Negative equity indicates accumulated losses; shareholder funds wiped out.

Additional Notes:

• Average employees: 1 (director), implying a micro-business structure with limited operational scale.
• Exempt from audit, relying on micro-entity reporting standards.
• Director is sole significant controller, concentrating control and accountability.

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3. Diagnosis: Financial Symptoms and Underlying Health

• Liquidity Strain: The company’s current liabilities now exceed current assets, showing symptoms of cash flow stress. This “unhealthy cash flow” suggests that the company may struggle to pay short-term debts on time without additional financing or asset sales.

• Eroded Capital Base: The negative net assets and shareholders’ funds reflect accumulated losses or withdrawals exceeding retained earnings. This is akin to a patient whose vital organs (capital) are weakening, reducing resilience to financial shocks.

• Asset Depletion: The disappearance of fixed assets from 2023 to 2024 could be symptomatic of asset sales to cover liabilities or write-offs, which might limit future earning capacity.

• Micro-Entity Size: The small scale limits access to capital markets and borrowing, making the company more vulnerable to operational hiccups.

• Single Director Control: While streamlined decision-making can be efficient, it concentrates risk and responsibility. The director should ensure robust financial oversight.

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4. Prognosis: Future Financial Outlook

If current trends persist, the company faces ongoing liquidity challenges and potential insolvency risk. The negative working capital and shareholder deficit may lead to difficulties in securing supplier credit or bank financing. Without intervention, continued erosion of capital may necessitate restructuring or risk of insolvency proceedings.

However, the micro-entity nature and low overhead might allow for quick corrective action if cash flow improves, costs are controlled, and revenues increase.

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5. Recommendations: Steps to Improve Financial Wellness

1. Improve Liquidity Management:

   • Tighten credit control to accelerate receivables.
   • Delay discretionary payments without damaging supplier relationships.
   • Explore short-term financing options if affordable.

2. Cost Control and Revenue Enhancement:

   • Review operating expenses rigorously to eliminate inefficiencies.
   • Investigate opportunities to diversify or increase consulting revenue streams.

3. Capital Injection:

   • Consider director loans or equity injection to rebuild net assets and restore financial cushion.

4. Monitor and Forecast Cash Flow:

   • Implement rolling cash flow forecasts to anticipate liquidity gaps and plan accordingly.

5. Asset Utilisation:

   • Evaluate whether fixed assets can be acquired or leveraged to improve operational capacity without undue risk.

6. Governance and Oversight:

   • Even as a micro-business, maintain clear financial records and consider external advice to navigate challenges.

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