LKO CONSULTANCY LTD

Executive Summary

LKO CONSULTANCY LTD shows a healthy financial foundation typical for a new IT consultancy startup, with positive net assets and a strong cash position relative to liabilities. However, the lack of revenue and employees suggests it is still in its formative stage. Moving forward, the company should focus on generating consistent revenue, managing working capital, and building operational capacity to ensure sustained financial health.

LKO CONSULTANCY LTD - Analysis Report

Company Number: 15069107

Analysis Date: 2025-07-19 12:06 UTC

Financial Health Assessment of LKO CONSULTANCY LTD

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1. Financial Health Score: B

Explanation:
LKO CONSULTANCY LTD, a newly incorporated private limited company in the IT consultancy sector, demonstrates a sound initial financial position with positive net assets and working capital. The company maintains a healthy cash balance relative to its short-term liabilities, indicating good liquidity. However, given its infancy (just over one year of operation) and absence of turnover or profit data, the overall score is tempered by limited operational history and lack of revenue information. With prudent management, it shows promise for solid financial health but needs to build operational momentum to reach top-tier status.

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2. Key Vital Signs

Metric	Value (£)	Interpretation
Cash at bank and in hand	12,551	Healthy cash reserves for a startup – a good liquidity buffer.
Current Liabilities	9,068	Modest short-term obligations, manageable relative to cash.
Net Current Assets (Working Capital)	3,483	Positive working capital signifies ability to cover immediate debts.
Net Assets (Shareholders’ Funds)	3,483	Positive equity base; company is solvent at this stage.
Called-up Share Capital	100	Minimal share capital, typical for startups.
Profit & Loss Reserve	3,383	Retained earnings or accumulated profit; indicates some operational gains or initial capital injection.
Number of Employees	0	No employees yet; likely owner-operated or outsourcing work.

What these signs reveal:

• Healthy cash flow equivalent: The company’s cash buffer exceeds immediate liabilities, indicating no liquidity distress ("no symptoms of cash flow strain").
• Positive net assets: The company is solvent, with equity exceeding debts; a fundamental sign of financial health.
• No employees yet: Suggests a lean startup phase; the company might be in business development or pre-revenue stage.
• No turnover reported: Lack of revenue data limits assessment of profitability and operational efficiency.

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3. Diagnosis

LKO CONSULTANCY LTD presents a "healthy patient" profile for a startup company:

• Liquidity: The cash position comfortably covers current liabilities, indicating good short-term financial stability.
• Solvency: Positive net assets confirm the company is not overburdened by debt and has a solid equity base.
• Operational status: No employees and no disclosed turnover suggest the company is in its foundational phase, potentially focusing on client acquisition or project development.
• Governance: Single director and 100% control by Mr. Rodney Oware provide clear decision-making but also concentration of risk.
• Compliance: Up to date on filings and accounts, indicating conscientious management.

Symptoms to monitor:

• Absence of revenues or profits raises a cautionary flag requiring close monitoring of upcoming trading results to ensure the company progresses from setup to active income generation.
• Current liabilities include unpaid taxation and social security costs (£5,600), which should be monitored carefully to avoid cash flow strain.

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4. Recommendations

To enhance financial wellness and ensure sustainable growth, the company should consider the following actions:

• Accelerate revenue generation: Focus on securing clients and projects to transition from startup capital reliance to operating cash flow. This will improve profitability and reduce reliance on shareholder funds.
• Manage working capital prudently: Maintain or increase cash reserves above short-term liabilities to avoid liquidity crunches, especially around tax and creditor payments.
• Plan for scaling: As the company grows, hiring skilled employees or contractors will be necessary. Budget accordingly to avoid sudden cost spikes.
• Financial reporting: Begin detailed tracking and reporting of turnover, gross margin, and profitability to diagnose operational efficiency and inform strategic decisions.
• Risk diversification: Consider spreading ownership or appointing additional directors to mitigate risks associated with single-person control.
• Tax planning: Ensure timely settlement of tax liabilities to avoid penalties and interest, and explore legitimate tax reliefs for startups.

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