LEUNGTECH LTD

Executive Summary

LEUNGTECH LTD maintains positive net assets but has experienced a significant decline in liquidity and equity from 2022 to 2023, signaling financial stress. Immediate focus on cash flow management, profitability improvement, and capital strengthening is essential to restore financial health and ensure sustainable operations. With proactive measures, the company can stabilize its financial condition and improve future outlook.

LEUNGTECH LTD - Analysis Report

Company Number: 13816553

Analysis Date: 2025-07-29 14:35 UTC

Financial Health Assessment for LEUNGTECH LTD

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1. Financial Health Score: C

Explanation:
LEUNGTECH LTD shows some positive attributes such as positive net current assets and net assets, indicating it is not insolvent. However, the company’s total net assets have sharply declined from £15,589 in 2022 to just £2,082 in 2023, a significant drop that raises concerns about financial stability and sustainability. This deterioration signals symptoms of financial distress, akin to a patient showing sudden weakness after prior good health. The micro-entity status and one-employee size limit the scope, but the trends warrant caution.

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2. Key Vital Signs (Critical Metrics & Interpretation)

Metric	2023 Value	2022 Value	Interpretation
Fixed Assets	£967	£803	Slight increase, indicating some investment or acquisition of long-term assets.
Current Assets	£1,161	£14,786	Dramatic decrease, indicating a loss of liquid resources or receivables; potential cash flow issues.
Current Liabilities	£46	£0	Small short-term obligations emerged; manageable but new stress on liquidity.
Net Current Assets	£1,115	£14,786	Sharp decline reflects reduced working capital; less cushion to meet short-term obligations.
Total Assets Less CL	£2,082	£15,589	Overall asset base shrank significantly, pointing to depletion of company resources.
Net Assets / Shareholders’ Funds	£2,082	£15,589	Equity dropped substantially, indicating accumulated losses or withdrawals.
Employees	1	1	Stable but minimal workforce, limiting operational capacity.

Interpretation Summary:

• The company's liquidity position has weakened considerably, potentially impacting day-to-day operations and ability to cover immediate expenses.
• The equity base shrinkage indicates the company may have incurred losses or returned capital to owners, both of which are warning signs for long-term viability.
• Fixed assets increased slightly, but this does not compensate for the sharp drop in current assets.
• Small current liabilities emerged, which is a new development compared to the prior year’s position.

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3. Diagnosis: Overall Financial Condition Assessment

LEUNGTECH LTD appears to be experiencing symptoms of financial distress despite maintaining a positive net asset position. The drastic reduction in current assets and net assets within a single year suggests either operational losses, significant withdrawals, or poor cash management. While the company is not insolvent, it is akin to a patient whose vital signs have suddenly worsened after a period of stability — urgent attention is required to prevent further deterioration.

Being a micro-entity with a single director and employee, the business is likely very small-scale and possibly reliant on limited revenue streams. The sharp decline in working capital raises concerns about liquidity and the company’s ability to fund its operational needs without external support.

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4. Recommendations: Specific Actions to Improve Financial Wellness

• Cash Flow Management:
  Conduct a detailed cash flow analysis to identify the root causes of the large decrease in current assets. Implement tighter controls on receivables, payables, and inventory (if any). Aim to rebuild a healthy cash buffer.

• Profitability Review:
  Review the profit and loss account (if available) to assess whether the company is generating sufficient income or incurring losses. Consider revising pricing, cost structures, or service offerings to improve margins.

• Capital Injection or Funding:
  If losses or withdrawals have eroded equity, consider injecting fresh capital to strengthen the balance sheet and restore confidence among creditors and stakeholders.

• Operational Efficiency:
  With only one employee (director), consider whether operational capacity matches business demands. Explore outsourcing or automation to reduce costs without compromising service delivery.

• Financial Planning and Monitoring:
  Implement monthly financial monitoring to catch early warning signs and respond promptly. Prepare budgets and forecasts to guide decision-making.

• Professional Advice:
  Engage with a financial advisor or accountant to analyze accounts comprehensively and devise a turnaround or growth strategy.

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