LETSOURCE LIMITED

Executive Summary

Letsource Limited possesses a strong asset base in investment properties but is currently challenged by significant liquidity strain, evidenced by negative net current assets and high short-term liabilities. The company remains solvent with positive net assets, yet its financial health is vulnerable due to tight working capital and substantial debt levels. Strategic focus on improving liquidity, refinancing short-term obligations, and strengthening equity will be essential to maintain and enhance financial wellness going forward.

LETSOURCE LIMITED - Analysis Report

Company Number: 13241356

Analysis Date: 2025-07-20 17:39 UTC

Financial Health Assessment of LETSOURCE LIMITED as at 31 March 2024

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1. Financial Health Score: C

Explanation:
Letsource Limited shows a mixed financial condition. The company holds substantial long-term assets (investment properties) but exhibits persistent working capital deficits and tight net asset positions. While the overall net assets are positive, negative net current assets indicate liquidity stress, suggesting symptoms of financial strain. The score “C” reflects a company that is solvent but facing liquidity challenges that require careful management to maintain financial wellness.

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2. Key Vital Signs

• Fixed Assets (Investment Properties): £820,660
  Indicates a strong asset base largely invested in property, which is stable but illiquid.

• Current Assets: £19,255 (all cash, no debtors in 2024)
  Very low short-term liquid assets relative to current liabilities.

• Current Liabilities: £459,021
  High short-term obligations create a significant liquidity gap.

• Net Current Assets: -£352,193
  A critical symptom indicating working capital strain — more debts due soon than cash and receivables available.

• Total Assets Less Current Liabilities: £468,467
  Reflects substantial long-term assets after settling short-term debts.

• Creditors Due After One Year: £459,021
  Long-term debt is sizeable, increasing financial leverage.

• Net Assets / Shareholders’ Funds: £9,446
  Positive but very thin equity base relative to total assets and liabilities.

• Share Capital: £134
  Minimal share capital, typical for a small private company.

• Trend:

  • Net assets increased from £6,030 in 2023 to £9,446 in 2024, a modest improvement.
  • Current liabilities increased, worsening liquidity position.
  • Cash improved significantly from £1,674 to £19,255, a positive sign for immediate liquidity.

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3. Diagnosis

Letsource Limited’s financial health resembles a patient with a strong skeleton (long-term assets) but poor blood circulation (working capital). The company’s significant investment property portfolio provides a solid foundation, but the ongoing negative net current assets highlight a liquidity crunch, meaning the firm may struggle to meet short-term debts without refinancing or asset sales.

The low net asset value compared to total liabilities shows high gearing or leverage — the company relies heavily on debt financing. This leverage exposes the company to financial risk, especially if rental income or cash inflows are volatile. The positive equity and improvement in net assets are encouraging, but the current liabilities outstrip liquid assets by a wide margin, signaling symptoms of distress that need intervention.

The absence of trade debtors in the latest year indicates either upfront payments or limited credit sales, which can be positive for cash flow but also suggests limited receivables buffer.

Overall, the financial condition is stable but vulnerable — the company is not insolvent but must manage liquidity carefully to avoid cash flow crises.

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4. Recommendations

• Improve Working Capital Management:
  Consider negotiating longer payment terms with creditors or accelerating receivables collection if applicable. Maintaining a healthy "cash flow pulse" is critical to avoid liquidity shocks.

• Refinance Short-Term Debt:
  Explore restructuring current liabilities into longer-term loans to ease immediate cash demands and improve financial breathing space.

• Leverage Investment Properties:
  Evaluate opportunities to monetize or refinance some property assets to raise cash reserves, improving liquidity without sacrificing long-term asset base.

• Increase Equity Base:
  Consider raising additional equity capital to strengthen shareholders’ funds, reduce reliance on debt, and improve the balance sheet’s resilience.

• Cash Flow Forecasting:
  Implement robust cash flow forecasting and monitoring to detect and address liquidity symptoms early.

• Monitor Debt Covenants:
  Stay alert to any loan covenants tied to financial ratios, ensuring compliance to prevent triggering defaults.

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Executive Summary