LEVI ENFORCEMENT & SECURITY LTD

Executive Summary

LEVI ENFORCEMENT & SECURITY LTD demonstrates a modestly stable financial position with positive equity growth but faces liquidity challenges indicated by negative working capital. Strengthening cash flow management and controlling costs will be critical to improving financial health and ensuring sustainable operations. Focused action on liquidity and working capital can transition the company towards a more robust financial condition.

LEVI ENFORCEMENT & SECURITY LTD - Analysis Report

Company Number: 13276955

Analysis Date: 2025-07-29 12:56 UTC

Financial Health Assessment for LEVI ENFORCEMENT & SECURITY LTD

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1. Financial Health Score: C

Explanation:
The company shows basic operational continuity with positive net assets and modest equity growth, but presents signs of financial strain due to persistent negative net current assets (working capital deficit) and reliance on longer-term liabilities. This indicates financial stress but not critical distress. The score "C" reflects a borderline healthy condition with room for improvement, especially in liquidity management.

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2. Key Vital Signs

Metric	2024 (£)	Interpretation
Fixed Assets	15,811	Stable investment in long-term assets; slightly decreased (-4%) from prior year, indicating minimal asset turnover.
Current Assets	19,871	Significant increase (+151%) from previous year, showing improved short-term resources (likely cash or receivables).
Current Liabilities	20,990	Increased (+96%) compared to prior year; liabilities due within one year are outweighing current assets.
Net Current Assets	-1,119	Negative working capital, though improved from -2,799 last year, indicating liquidity pressure but slight recovery.
Creditors (long-term)	9,313	Substantial long-term liabilities though reduced from prior year, suggesting some debt repayment or reclassification.
Net Assets (Equity)	4,355	Positive and growing equity, an encouraging sign of retained value despite operational challenges.
Employees	2	Small workforce consistent with micro-entity status; limited scale but manageable overhead.
Share Capital	10	Minimal, typical for micro private limited companies; shareholder investment is modest.

Interpretation of Vital Signs:

• The negative net current assets ("working capital deficit") is a symptom of financial strain—similar to a patient whose short-term liquidity is insufficient to cover immediate obligations, leading to potential cash flow issues.
• Improvement in current assets and reduction in long-term creditors is a positive sign, indicating some financial management and attempts to stabilize.
• The company’s net assets have increased from a nominal £10 to £4,355, suggesting some retained earnings or capital injection, which is a healthy sign.
• The small staff size and micro-entity classification mean fewer overheads but also limited operational scale.

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3. Diagnosis

LEVI ENFORCEMENT & SECURITY LTD is currently in a stable but fragile financial condition. The company exhibits symptoms of liquidity stress due to a consistent negative working capital position, although the situation has improved in the latest financial year. This implies the company is managing to meet short-term obligations but must continue to monitor cash flow carefully to avoid a liquidity crisis.

The positive net assets and equity growth indicate that the business has not eroded shareholder value and may be generating some retained earnings or benefiting from capital input. However, the high current liabilities relative to current assets suggest the company may rely on credit or delayed payments, which can be risky for a small business.

The company’s micro-entity status and small employee base imply simplicity in operations but also limited financial buffer. The presence of long-term creditors shows some leverage, which needs careful servicing.

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4. Recommendations

To improve financial wellness and avoid symptoms of distress (like cash flow shortages), the company should consider:

• Improve Working Capital Management:

  • Accelerate collection of receivables and closely monitor cash inflows.
  • Negotiate longer payment terms with creditors to reduce immediate cash outflows.
  • Maintain a tight control on inventory and unnecessary current assets to free cash.

• Strengthen Liquidity Reserves:

  • Build a cash buffer to cover at least 3 months of operating expenses.
  • Explore short-term financing options if necessary, but avoid over-leverage.

• Cost Control and Efficiency:

  • Review operating costs to ensure they align with revenue generation capacity.
  • Consider whether further automation or outsourcing could reduce overhead.

• Capital Injection or Profit Retention:

  • If possible, inject additional equity to strengthen the balance sheet.
  • Retain profits rather than distribute dividends until liquidity improves.

• Regular Financial Monitoring:

  • Implement monthly cash flow forecasting to detect early warning signs.
  • Review financial metrics periodically to adjust strategy proactively.

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