LITHP LTD

Executive Summary

LITHP LTD is a young dental practice showing early financial stability but with signs of working capital stress due to current liabilities exceeding current assets. The company’s net assets are positive but thin, indicating a fragile equity base. Immediate focus on improving liquidity and cash flow management is needed to ensure ongoing financial health and support sustainable growth.

LITHP LTD - Analysis Report

Company Number: 15126478

Analysis Date: 2025-07-29 20:02 UTC

Financial Health Assessment: LITHP LTD

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1. Financial Health Score: C

Explanation:
LITHP LTD, a micro-entity dental practice, shows early-stage financials typical of a young company (incorporated September 2023). The business exhibits modest net assets and shareholders’ funds, but current liabilities slightly exceed current assets, indicating a mild liquidity strain. The company is solvent but faces "symptoms" of working capital stress, which is not uncommon for startups in service industries. The overall financial health is stable but cautious, meriting a "C" grade—adequate but requiring attention to avoid deterioration.

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2. Key Vital Signs

Metric	Value (£)	Interpretation
Fixed Assets	3,969	Small investment in long-term assets, appropriate for a micro dental practice.
Current Assets	30,214	Includes cash, receivables; shows some liquidity but not excessive.
Current Liabilities	32,632	Slightly higher than current assets, indicating a working capital deficit of £2,418.
Net Current Assets	-2,418	Negative working capital signals short-term liquidity pressure, a key "symptom of distress".
Total Assets Less Current Liabilities	1,551	Positive but low buffer after covering short-term obligations.
Net Assets / Shareholders' Funds	936	Positive equity base but very thin, reflecting limited retained earnings or capital injection.
Number of Employees	3	Small team consistent with micro entity status.

Interpretation of Vital Signs:

• The negative net current assets is the most critical "vital sign," akin to a slightly elevated heart rate warning of liquidity stress. It suggests the company may struggle to meet short-term obligations without additional cash inflow or financing.
• The positive net assets and shareholders’ funds show the company is not insolvent, like a patient with stable but fragile overall health.
• The small fixed asset base is typical for a service business and does not raise concern.

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3. Diagnosis: Financial Condition Analysis

LITHP LTD is in its infancy, operating in the dental practice sector (SIC 86230). The financial statements, prepared under micro-entity provisions, reveal a business still establishing its financial footing. The current liabilities slightly exceed current assets, which is a "symptom" of working capital strain—common in new companies as they build client base and manage initial expenses.

The modest net assets (£936) indicate that the company has a narrow equity buffer, making it sensitive to any operational setbacks or unexpected expenses. The business has not yet built substantial retained earnings or reserves, typical for a startup still investing in growth.

The director, Mr Dong Min Jeon, is also the sole significant controller, which is positive for decision-making agility but may present risk if not supplemented with strong governance as the company grows.

Overall, the diagnosis is that LITHP LTD is financially stable but borderline on liquidity, requiring close monitoring and proactive cash flow management.

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4. Recommendations: Improving Financial Wellness

Short-term Actions:

• Improve Working Capital Management:
  Tighten control over receivables and payables. Consider negotiating longer payment terms with suppliers or accelerating client payments to reduce the working capital gap.

• Monitor Cash Flow Closely:
  Implement weekly cash flow forecasts to anticipate and manage liquidity needs, avoiding "cash flow fainting spells."

• Secure Additional Working Capital:
  Explore short-term financing options such as an overdraft or invoice financing to buffer liquidity pressures.

Medium to Long-term Actions:

• Build Equity Reserves:
  Retain earnings or inject additional capital to strengthen net assets, increasing the company’s financial resilience.

• Strategic Growth Planning:
  Focus on expanding patient base and revenues to improve profitability and cash generation capacity.

• Governance and Controls:
  As the business grows, implement stronger financial controls and consider appointing additional directors or advisors to diversify oversight.

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