KENTISOL LTD

Executive Summary

Kentisol Ltd shows a declining financial position with weakening liquidity and equity but remains solvent. Focused cash flow management and capital reinforcement are crucial to restore financial vitality and ensure sustainable operations moving forward.

KENTISOL LTD - Analysis Report

Company Number: 12947493

Analysis Date: 2025-07-20 14:01 UTC

Financial Health Assessment Report for Kentisol Ltd (as of 31 October 2023)

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1. Financial Health Score: C

Explanation:
Kentisol Ltd shows a modest but declining financial position, reflecting signs of stress though not critical distress. The company holds positive net current assets and shareholders' funds but has seen a significant drop in working capital and equity since 2020. This suggests weakening financial resilience, warranting cautious monitoring and proactive management.

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2. Key Vital Signs

Metric	2023 Value (£)	Interpretation
Fixed Assets	0	No long-term assets, indicating minimal investment in property or equipment.
Current Assets	5,678	Cash or receivables available for short-term obligations, decreased sharply from prior years.
Current Liabilities	4,049	Short-term debts due within one year; reduced but still close to current assets.
Net Current Assets (Working Capital)	1,629	Positive but greatly diminished, indicating tighter liquidity.
Shareholders' Funds (Equity)	1,629	Equity reduced significantly over 3 years, indicating accumulated losses or withdrawals.
Account Category	Micro	Small scale operation, limited complexity in financials.
Average Employees	1	Very lean operation, likely owner-managed.

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3. Symptoms Analysis (What the Numbers Reveal)

• Declining Liquidity: Net current assets (working capital) have dropped from £12,208 in 2020 to £1,629 in 2023. This is a symptom of tightening cash flow and decreased ability to cover short-term obligations comfortably—a "weak pulse" in cash flow terms.
• Diminished Equity: Shareholders’ funds have fallen from £12,675 to £1,629 over the same period. This erosion points to accumulated losses or capital withdrawals, indicating the company is losing its financial "vitality."
• No Fixed Assets: The absence of fixed assets suggests the company operates without significant physical infrastructure or investment, relying on intangible or service-based activities. This can reduce capital expenditure but might limit collateral for financing.
• Sustainability Question: The sharp decrease in both working capital and equity signals a symptom of financial distress that could, if unchecked, lead to insolvency risks.
• Micro Entity Status: Filing under micro entity rules suggests simplified reporting and possibly a low level of complexity or scale, but also limits transparency on profitability or cash flow details.

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4. Diagnosis

Kentisol Ltd’s financial health shows signs of fragility. The company has a positive but critically low buffer in liquidity and equity, implying it is "breathing but weak." The trend over four years is a steady decline in financial strength, indicating underlying challenges such as reduced profitability, cash flow issues, or increased liabilities relative to assets. Without intervention, these symptoms may worsen, risking the company’s ability to meet obligations or invest in growth.

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5. Prognosis

If the current trends continue without corrective measures, Kentisol Ltd faces increased risk of financial distress. The company must stabilize cash flow, rebuild equity, and possibly diversify or strengthen its asset base to avoid potential liquidity crises. However, with focused management attention and strategic financial planning, recovery and renewed vitality are achievable.

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6. Recommendations

• Improve Cash Flow Management: Tighten receivables collection, manage payables strategically, and monitor cash inflows/outflows daily to maintain a healthy cash flow "heartbeat."
• Cost Control: Review operating expenses to identify inefficiencies or non-essential costs that can be trimmed to preserve working capital.
• Capital Injection: Consider additional equity investment or owner funding to strengthen the balance sheet and restore shareholders' funds.
• Explore Financing Options: Investigate short-term credit facilities or invoice financing to smooth liquidity fluctuations without long-term commitments.
• Asset Strategy: Evaluate opportunities to acquire or leverage fixed assets or intellectual property to enhance company value and borrowing capacity.
• Regular Financial Review: Establish monthly financial reviews to detect early warning signs and respond proactively.
• Business Model Review: Assess the viability of current business lines (IT consultancy, retail, and business support) for profitability and growth potential.

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Executive Summary

Kentisol Ltd currently exhibits signs of financial weakness with declining liquidity and equity over recent years, reflecting a fragile but still positive financial condition. Immediate focus on cash flow management and capital strengthening is essential to avoid worsening distress. With timely strategic actions, the company can regain financial health and improve its resilience against future challenges.