LOCATION SUPPORT SERVICES LTD

Executive Summary

LOCATION SUPPORT SERVICES LTD is financially stable but displays signs of liquidity stress due to negative working capital, which requires active cash flow management. The company maintains positive net assets and a minimal equity base, necessitating prudent financial controls and strategic planning to improve resilience and support sustainable growth.

LOCATION SUPPORT SERVICES LTD - Analysis Report

Company Number: 14152639

Analysis Date: 2025-07-29 14:15 UTC

Financial Health Assessment Report for LOCATION SUPPORT SERVICES LTD

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1. Financial Health Score: Grade C

Explanation:
The company demonstrates a stable but fragile financial position typical of a very small (micro) enterprise in its early years. While it maintains positive net assets and shareholder funds, its working capital (net current assets) is negative, indicating potential liquidity stress. The modest asset base and minimal equity cushion suggest vulnerability to financial shocks, though no immediate red flags such as insolvency or heavy long-term debt are present.

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2. Key Vital Signs

Metric	2024 Value (£)	Interpretation
Fixed Assets	67,149	Represents investment in long-term assets; slight decline from previous year
Current Assets	86,779	Includes cash and receivables; increased significantly, improving short-term liquidity
Current Liabilities	149,779	Debts due within one year; increased, outpacing current assets
Net Current Assets	(63,000)	Negative working capital indicating potential liquidity issues
Total Assets less CL	4,149	Slight positive buffer after covering current liabilities
Net Assets / Shareholders' Funds	2,949	Equity capital remains positive but very low, reflecting minimal retained earnings
Employee Count	1	Micro company size, low operational scale

Interpretation of Vital Signs:

• Negative Working Capital (Net Current Assets): The company’s current liabilities exceed current assets by £63,000, signaling a potential strain in meeting short-term obligations, akin to a patient showing symptoms of dehydration—there’s a need to improve cash flow to restore balance.
• Positive Net Assets: Despite liquidity pressure, the company retains a positive net asset position, which is a sign of solvency and financial viability.
• Declining Fixed Assets: Slight reduction in fixed assets may indicate asset sales or depreciation, possibly to manage cash flow or reflect usage.
• Growth in Current Assets: A positive sign that liquid resources have improved, potentially from increased cash or receivables collection.
• Minimal Equity Base: The low shareholders’ funds imply limited financial reserves to absorb losses or invest in growth.

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3. Diagnosis: Financial Condition Overview

LOCATION SUPPORT SERVICES LTD currently exhibits symptoms of liquidity stress—specifically, negative net current assets—which may affect its ability to cover immediate liabilities without additional financing or cash inflows. However, the company is not in immediate danger of insolvency since net assets remain positive and there is no long-term borrowing reported.

The financial health resembles a patient with borderline vital signs: stable but requiring close monitoring. The company operates on a micro scale with one employee, which limits operational complexity but also its capacity to generate significant cash flows rapidly.

The increase in current assets is a positive development, potentially reflecting improved cash management or increased sales, but the rise in current liabilities outpaces this growth, which is a warning sign that expenses or payables are growing faster than assets.

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4. Recommendations: Prescriptions for Financial Wellness

• Improve Working Capital Management:
  Prioritize collection of receivables and manage payables to reduce the liquidity gap. Consider negotiating longer payment terms with suppliers or seeking short-term credit facilities to smooth cash flow cycles.

• Enhance Cash Flow Monitoring:
  Implement rigorous cash flow forecasting to anticipate shortfalls and plan accordingly. This is akin to monitoring a patient’s hydration levels to prevent crisis.

• Cost Control and Expense Review:
  Carefully review operating expenses to identify areas to reduce costs without compromising service quality, helping to ease cash outflows.

• Build Equity Reserves:
  Consider injecting additional capital or retaining more earnings to strengthen the equity base, providing a buffer for future uncertainties.

• Asset Utilization:
  Evaluate fixed assets for potential underutilization; if feasible, convert non-essential assets into cash to improve liquidity.

• Strategic Growth Planning:
  Explore opportunities to increase revenue streams within the company’s niche in security and equipment rental services, leveraging industry contacts to scale cautiously.

• Maintain Compliance and Timely Filings:
  Continue ensuring accounts and confirmation statements are filed promptly to avoid penalties and maintain good standing.

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