LAYOLA CARE LTD

Executive Summary

LAYOLA CARE LTD maintains a healthy liquidity position with strong working capital and operational growth, but a significant drop in net assets and rising deferred income indicate cautious monitoring is needed. The company is financially stable but should focus on managing cash flow and profitability to sustain growth. Proactive financial oversight will help ensure continued wellness and resilience.

LAYOLA CARE LTD - Analysis Report

Company Number: 13557028

Analysis Date: 2025-07-19 12:54 UTC

Financial Health Assessment for LAYOLA CARE LTD

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1. Financial Health Score: B-

Explanation:
LAYOLA CARE LTD presents a moderately stable financial position typical of a growing micro-entity in residential care. The company shows positive net current assets and net assets, indicating liquidity and solvency. However, a significant increase in accruals and deferred income in the latest year, combined with a notable drop in net assets, signals caution. While the business is not in distress, these symptoms suggest the need for prudent management to avoid future financial strain.

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2. Key Vital Signs

Metric	2024 Value (£)	Interpretation
Fixed Assets	5,442	Modest investment in long-term assets, typical for micro businesses.
Current Assets	122,493	Healthy cash and short-term receivables to cover obligations.
Current Liabilities	56,667	Short-term debts are significant but manageable.
Net Current Assets	75,533	Strong working capital, indicating liquidity strength.
Accruals & Deferred Income	61,351	A large increase compared to prior year, may reflect received income not yet earned or payable expenses, which reduces available cash.
Net Assets (Shareholders' Funds)	19,624	Positive equity but declined sharply from £38,761 in 2023, signaling potential underlying issues.
Employee Count	27	Doubling workforce from prior year, showing growth but increasing expense base.

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3. Diagnosis: What the Numbers Reveal

• Liquidity and Working Capital:
  The company maintains a healthy net current asset position (£75,533), reflecting a "healthy cash flow" environment sufficient to meet immediate liabilities. This is a positive "heartbeat" in financial terms, indicating operational cash is generally adequate.

• Asset Base and Growth:
  Fixed assets have increased modestly, consistent with investment in operational resources. The doubling of employees suggests business expansion, which can strain finances if revenue growth does not keep pace.

• Accumulated Earnings and Net Assets:
  The net assets have almost halved compared to the previous year (£19,624 down from £38,761), which may be a symptom of increased liabilities or reduced profitability. This drop is a "warning symptom" — potentially from increased deferred income and accruals (£61,351) which may mask true liquidity if these represent future obligations.

• Deferred Income and Accruals:
  The sharp rise in accruals and deferred income is a critical "symptom of distress" or at least complexity. It suggests that the company has received substantial prepayments or has incurred expenses not yet recognized in the profit and loss account, which can complicate cash flow management.

• Profitability and Reserves:
  No explicit profit and loss data available, but the reduction in net assets hints at reduced profitability or increased expenses. The directors' report does not indicate audit requirements, consistent with micro-entity status, so financial statements are unaudited, which calls for cautious interpretation.

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4. Recommendations

1. Cash Flow Monitoring:
   Closely monitor cash inflows and outflows, particularly the nature of the increased deferred income and accruals. Ensure that deferred income corresponds to future service delivery and is not masking cash shortages.

2. Profitability Analysis:
   Conduct a detailed review of income and expense trends to address the decline in net assets. Identify cost drivers linked to workforce expansion and assess pricing strategies to maintain margins.

3. Working Capital Management:
   Maintain a strong focus on receivables collection and supplier payments schedule to sustain the healthy net current asset ratio.

4. Financial Planning:
   Prepare cash flow forecasts incorporating the impact of increased employee numbers and deferred income to prevent liquidity crunches.

5. Stakeholder Communication:
   Transparently communicate financial conditions and growth plans with shareholders and creditors to build confidence and support.

6. Consider Professional Review:
   Although not mandatory, a voluntary financial review or advisory could help identify risks early and recommend tailored improvements.

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Medical Analogy Summary

LAYOLA CARE LTD demonstrates a generally "healthy pulse" with adequate liquidity and asset growth, akin to a patient showing good vital signs. However, the "symptoms" of decreased net assets and rising deferred income are cautionary signals—like unexplained fatigue or elevated blood pressure—that require investigation and management. With attentive "treatment" through cash flow vigilance and cost control, the company can strengthen its financial "immune system" against future stress.

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