LEGIT GUYS LTD

Executive Summary

LEGIT GUYS LTD is a solvent micro-entity with positive equity and working capital but shows signs of liquidity tightening due to decreased current assets. The company must focus on cash flow management and rebuilding its liquidity buffer to maintain operational health. Strategic investment in fixed assets is promising but requires careful balance against short-term financial flexibility.

LEGIT GUYS LTD - Analysis Report

Company Number: NI693320

Analysis Date: 2025-07-29 17:00 UTC

Financial Health Score: B-

LEGIT GUYS LTD demonstrates a stable but somewhat diminishing financial position typical of a micro-entity in its early years. While the company shows positive net assets and healthy working capital, there are signs of contraction in current assets and net assets that warrant cautious monitoring.

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1. Key Vital Signs

Metric	2024 (£)	2023 (£)	Interpretation
Fixed Assets	1,329	185	Increase indicates investment in long-term assets (positive sign).
Current Assets	2,627	5,032	Decrease indicates reduction in liquid resources or receivables (potential liquidity concern).
Current Liabilities	524	937	Decrease in short-term liabilities (positive).
Net Current Assets	2,103	4,095	Working capital halved, reflecting reduced short-term financial cushion.
Total Assets Less Current Liabilities	3,432	4,280	Decline indicates overall reduction in net assets after short-term debts.
Net Assets (Shareholders’ Funds)	3,232	4,180	Decline signals erosion in equity base but still positive.
Employees	0	0	No employees, likely owner-operated or subcontracted work.

Interpretation:
The company retains positive net assets and working capital, which are vital indicators of financial "vital signs." However, the sharp decrease in current assets and net current assets (working capital) may suggest tightening liquidity or reduced cash inflows—symptoms that need watching to avoid cash flow distress.

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2. Symptoms Analysis

• Healthy Cash Flow Signs: Positive net current assets indicate the company can cover its short-term liabilities. However, the decline from £4,095 to £2,103 is a symptom of financial contraction that could strain operational flexibility if continued.

• Asset Management: Increase in fixed assets (from £185 to £1,329) suggests investment in equipment or resources, which could support growth, but must be balanced against reduced current assets.

• Equity Position: Net assets remain positive, which is a good sign of solvency and business viability. The decrease from £4,180 to £3,232, however, reflects some retained earnings or capital erosion, possibly due to expenses exceeding income or asset write-downs.

• Employee Base: No employees implies a lean operation, which can reduce overhead but might limit capacity for growth or business development.

• Compliance and Reporting: Accounts and confirmation statements are filed on time, indicating good regulatory compliance—a sign of sound governance.

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3. Diagnosis

LEGIT GUYS LTD shows the financial health of a young micro-entity with stable solvency but signs of liquidity tightening. The company is solvent with positive equity and working capital but is experiencing a contraction in liquid assets that could become problematic if the trend persists. The investment in fixed assets may be a strategic move to support future business, but it places pressure on current liquidity.

The company’s zero employee count suggests a minimal operational footprint, which reduces fixed costs but may limit scalability. Ownership concentration is very high (single owner with 75-100% control), which centralizes decision-making but could be a risk if diversification of management expertise is needed.

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4. Recommendations

• Improve Cash Flow Management: Monitor receivables and payables closely to prevent further erosion of current assets. Consider negotiating better payment terms with clients and suppliers.

• Build Liquidity Buffer: Aim to rebuild working capital to at least previous levels to ensure operational resilience and avoid cash flow "stress symptoms."

• Review Fixed Asset Investment: Evaluate if the increase in fixed assets is delivering anticipated returns or if any disposals or leasing options could free up cash.

• Explore Growth Opportunities: Consider modest hiring or outsourcing to expand capacity, which may increase revenue and improve financial stability.

• Maintain Compliance and Transparency: Continue timely filings and consider preparing more detailed management accounts to better track financial trends.

• Plan for Future Financing: As the company grows, consider access to credit or equity investment to support expansion and smooth financial fluctuations.

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