LIBERTY HOME SOLUTIONS LTD

Executive Summary

LIBERTY HOME SOLUTIONS LTD demonstrates improving net asset strength but faces liquidity challenges due to negative working capital and reduced current assets. While the company is solvent, careful cash flow management and operational adjustments are recommended to maintain financial stability and support future growth.

LIBERTY HOME SOLUTIONS LTD - Analysis Report

Company Number: 13478834

Analysis Date: 2025-07-29 15:53 UTC

Financial Health Assessment for LIBERTY HOME SOLUTIONS LTD

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1. Financial Health Score: C

• Explanation: The company shows some strengths such as positive net assets and shareholder funds growth, but also displays warning signs in working capital management and asset reduction. The score "C" reflects a stable yet cautious outlook requiring monitoring and improvement.

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2. Key Vital Signs

Metric	2024 Value (£)	Interpretation
Fixed Assets	3,328	Declining from prior years, indicates reduced long-term investment or asset disposals. Could be a symptom of asset liquidation or underinvestment.
Current Assets	4,840	Nearly halved from £9,923 in prior year, indicating reduced liquidity or asset conversion.
Current Liabilities	5,199	Slightly decreased but still exceeds current assets, raising concerns about short-term liquidity pressures.
Net Current Assets (Working Capital)	(359)	Negative working capital signals potential difficulty meeting short-term obligations—symptom of financial stress.
Total Net Assets (Equity)	2,232	Increased from £653 in 2023, showing retained profits or capital injection improving overall net worth—positive sign.
Shareholders’ Funds	2,232	Matches net assets, indicating no external equity complications.
Employee Count	1 (down from 2)	Reduced workforce may reflect cost-cutting or downsizing in response to business conditions.

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3. Diagnosis

LIBERTY HOME SOLUTIONS LTD, classified as a micro-entity in the specialised construction sector, exhibits mixed financial health indicators:

• Positive Signs: The increase in net assets and shareholders' funds over the last year suggests the company has generated retained earnings or received capital injections, strengthening its equity base. This improvement is a vital sign of resilience and potential growth capability.

• Warning Symptoms: The decline in fixed assets and current assets, combined with negative working capital (current liabilities exceeding current assets), signals liquidity constraints. This condition is akin to a patient showing symptoms of shortness of breath—indicating the business might struggle to cover immediate debts without converting non-current assets or obtaining external funding.

• Operational Observations: The reduction in average employee numbers may be a strategic response to financial pressures, but could also reflect reduced operational capacity, potentially impacting future revenue streams.

• Overall Condition: The company’s balance sheet shows "net assets" increasing, which is a healthy sign of solvency, yet the negative working capital is a critical symptom needing attention to avoid cash flow crises. The company is not in distress but is in a fragile state where cash flow management is crucial.

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4. Recommendations

To improve financial wellness and strengthen the company’s financial condition, consider the following steps:

• Improve Liquidity Management: Focus on converting receivables and inventory to cash more efficiently. Renegotiate payment terms with suppliers to extend payables and improve working capital balance.

• Asset Utilisation: Review fixed assets to determine if disposals are necessary or if reinvestment is possible to support operational capacity and growth. Consider leasing options to reduce capital expenditure pressure.

• Expense Control: Maintain stringent control over operating expenses and staffing levels. Explore opportunities to increase operational efficiency without compromising service quality.

• Financial Planning: Prepare detailed cash flow forecasts to anticipate short-term funding needs. Evaluate access to short-term financing facilities or overdrafts as a buffer against liquidity crunches.

• Growth Strategy: With a strengthened equity base, cautiously explore new contracts or markets to increase turnover, ensuring new ventures do not exacerbate liquidity issues.

• Monitoring: Regularly monitor key financial ratios, especially current ratio and net asset position, to detect early warning signs of financial distress.

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