LOOP ADVISORY LTD

Executive Summary

LOOP ADVISORY LTD exhibits a strong upward financial trajectory with significant growth in cash reserves and net assets, indicating healthy liquidity and capital structure for a young company. While hire purchase debt introduces some financial leverage risk, the company’s overall position is stable and improving. Careful debt management and ongoing financial monitoring will support continued business health and growth.

LOOP ADVISORY LTD - Analysis Report

Company Number: SC725117

Analysis Date: 2025-07-20 14:50 UTC

Financial Health Assessment of LOOP ADVISORY LTD

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1. Financial Health Score: B

Explanation:
LOOP ADVISORY LTD demonstrates solid improvement in its financial position over its first two full years of trading. The company displays healthy cash reserves and growing net assets, which indicate positive financial momentum. However, the presence of hire purchase debt (long-term liabilities) and relatively high current liabilities compared to current assets suggest some financial leverage and liquidity risks that should be monitored carefully. Overall, the company’s financial "vital signs" are good but with room for improvement to reach top-tier financial wellness.

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2. Key Vital Signs & Interpretation:

Metric	2024 Figure (£)	Interpretation
Cash & Cash Equivalents	193,405	Very healthy cash flow; strong liquidity buffer.
Current Assets	203,849	Sufficient short-term assets to cover current liabilities.
Current Liabilities	125,787	Moderate short-term obligations; manageable but notable.
Net Current Assets	78,062	Positive working capital; company can meet short-term debts.
Total Assets Less Current Liabilities	177,814	Indicates asset base after covering short-term debts.
Long-Term Liabilities	59,899	Hire purchase debt; leverage that requires regular servicing.
Net Assets / Shareholders’ Funds	110,288	Solid equity base reflecting retained earnings growth.
Debtors	10,444	Modest receivables; manageable credit risk.
Tangible Fixed Assets	99,752	Significant investment in equipment/assets; capital-intensive.

Interpretation:

• The company’s cash reserves have more than doubled in the last year, signaling strong cash generation or capital injection.
• Positive net current assets ("working capital") suggest the company is free from immediate liquidity distress—no symptoms of cash flow "blockages."
• However, the company carries a notable hire purchase debt, which while not unusual, implies ongoing financial commitments that could stress cash flow if revenue slows.
• The net asset base has grown more than fourfold, indicating growing retained profits and overall financial strength.

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3. Diagnosis: Overall Financial Condition

LOOP ADVISORY LTD is in a stable and improving financial condition, showing signs of a "healthy heart" with its expanding net assets and strong liquidity. The business is investing in tangible fixed assets, which may represent growth or capacity building. The positive working capital and large cash balance reduce the risk of short-term distress.

However, the company has taken on hire purchase debt, which is akin to taking on a controlled "external burden." This is not inherently unhealthy but requires diligent management to avoid cash flow strain. The company’s current liabilities have increased significantly, especially taxation and social security liabilities, which could indicate increasing operational scale or timing of payments.

Given that this company is relatively young (incorporated in 2022), its financial improvement trajectory is promising but not yet mature. The director’s confidence in going concern status supports this positive outlook.

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4. Recommendations: Improving Financial Wellness

• Manage Debt Servicing Carefully: Maintain close control over hire purchase repayments to avoid liquidity crunches. Consider refinancing options if better terms emerge.
• Monitor Tax and Social Security Liabilities: The substantial increase in these current liabilities requires proactive cash planning to prevent last-minute payment pressure.
• Increase Debtor Collection Efficiency: While receivables are low, ensuring timely collections will maintain healthy cash flow. Consider formal credit control measures if sales increase.
• Review Fixed Asset Utilisation: Ensure that the tangible fixed assets invested in are contributing to revenue growth to avoid "idle capital" that burdens depreciation and financing costs.
• Build Reserves for Future Growth: Continue to build retained earnings to support organic growth and mitigate risks from external financing needs.
• Regular Financial Reviews: Conduct quarterly financial health checks to detect any early "symptoms" of distress, particularly in cash flow and debt levels.

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Medical Analogy Summary:
LOOP ADVISORY LTD is currently "fit and well," showing a strong financial pulse with healthy cash flow and growing equity. The company carries some "manageable weight" in terms of hire purchase debt, which requires regular monitoring to avoid stress on liquidity. With vigilant financial "check-ups" and prudent management, the company is poised for continued financial vitality.

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