LGPSYCHOLOGY LTD

Executive Summary

LGPSYCHOLOGY LTD shows a stable and growing financial position with positive working capital and equity growth, indicating healthy operational performance for a micro-entity. The key caution is a notable increase in short-term liabilities, which requires close monitoring to maintain cash flow health. With prudent management of liabilities and continued focus on profitability, the company is well-positioned for sustainable financial wellness.

LGPSYCHOLOGY LTD - Analysis Report

Company Number: 13799563

Analysis Date: 2025-07-29 15:51 UTC

Financial Health Assessment for LGPSYCHOLOGY LTD

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1. Financial Health Score: B

Explanation:
LGPSYCHOLOGY LTD demonstrates a generally healthy financial position for a micro-entity in its early years, with solid net current assets and growing shareholders’ funds. However, there are early "symptoms" suggesting cautious monitoring is needed, such as increased short-term liabilities and a slight reduction in fixed assets. The score reflects stability but also the need for active cash flow management as the business develops.

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2. Key Vital Signs

Metric	2023 Value (£)	2022 Value (£)	Interpretation
Fixed Assets	557	695	Slight decline; non-critical for this service-based business.
Current Assets	6,492	3,284	Healthy increase, indicating improved liquidity ("healthy cash reserves").
Current Liabilities	2,705	326	Significant rise; watch for "symptoms of financial strain" in short-term obligations.
Net Current Assets	3,952	2,987	Positive working capital, showing the ability to cover short-term debts comfortably.
Net Assets / Shareholders Funds	3,909	2,318	Strong equity growth; "healthy balance sheet" showing retained profits or capital injections.
Employees (average)	1	1	Stable staffing level; consistent with micro business size.

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3. Diagnosis

LGPSYCHOLOGY LTD's financial "vital signs" suggest a company in a stable and growing condition. The increase in current assets and net assets reflects good business momentum and accumulation of resources. The company’s working capital is positive, indicating it can meet its imminent financial obligations without distress.

However, the sharp increase in current liabilities from £326 to £2,705 over one year represents a "symptom" that should be carefully diagnosed. This could be due to increased short-term payables, accruals, or deferred income. While the company still has a comfortable buffer (net current assets positive), this growth in liabilities should be monitored to avoid potential cash flow challenges.

The fixed assets have decreased slightly but remain a small portion of total assets, which is typical for a service-oriented business operating with minimal physical infrastructure.

The company is a micro-entity, so its financial complexities are limited, but the steady growth in net assets and equity indicates sound financial management and profitability or capital injections since incorporation.

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4. Recommendations

• Monitor Short-Term Liabilities Closely: The significant rise in current liabilities should be analyzed to understand its nature (e.g., supplier credit, accrued expenses). Managing these liabilities proactively will help maintain a "healthy cash flow" and prevent liquidity stress.

• Cash Flow Forecasting: Implement regular cash flow forecasts to anticipate future working capital needs and avoid any liquidity crunches, especially given the increase in short-term obligations.

• Maintain Profitability Focus: Continue to build retained earnings to strengthen shareholders’ funds, helping the company expand its financial resilience.

• Consider Fixed Asset Needs: While fixed assets are minimal, evaluate if any investment in equipment, technology, or resources is needed to support business growth without impacting liquidity.

• Keep Filing Compliance Timely: The company is up to date with filings and accounts, which supports good financial governance and avoids penalties or reputational risks.

• Review Pricing and Cost Controls: As the company grows, ensure pricing strategies and cost management are optimized to sustain profitability and working capital health.

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