MAGENTA INVENTORY AND PROPERTY SERVICES LIMITED

Executive Summary

Magenta Inventory and Property Services Limited's financial health shows a cautious improvement with positive net assets and healthy cash levels, signaling recovery from prior distress. However, ongoing negative working capital highlights liquidity risks that require attentive management. Strategic focus on working capital optimization and cash reserve strengthening is recommended to secure sustained financial wellness.

MAGENTA INVENTORY AND PROPERTY SERVICES LIMITED - Analysis Report

Company Number: 13680383

Analysis Date: 2025-07-29 16:57 UTC

Financial Health Assessment for Magenta Inventory and Property Services Limited

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1. Financial Health Score: C

Explanation:
The company shows signs of recovery from previous financial distress but remains in a fragile state. Current assets have improved relative to liabilities, and net assets have turned positive, indicating some healing. However, working capital remains negative and balances are tight, suggesting the company must maintain careful cash management and operational discipline to avoid relapse into financial trouble.

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2. Key Vital Signs

Metric	2024 Value	Interpretation
Fixed Assets	£3,386	Reduced from prior years; tangible assets dominate now.
Current Assets	£12,414	Declined from 2023 but includes healthy cash holdings.
Cash	£8,123	Strong cash base relative to total assets; “healthy cash flow”.
Debtors	£4,291	Stable, indicating consistent receivables management.
Current Liabilities	£15,562	Reduced significantly from 2023 but still exceeds current assets.
Net Current Assets	-£3,148	Negative working capital indicates short-term liquidity stress ("symptom of distress").
Net Assets (Equity)	£238	Positive after prior years of negative equity; "sign of recovery".
Shareholders’ Funds	£236	Aligns with net assets; small equity buffer remains.
Turnover / Profitability	Not disclosed	Unable to assess operational profitability directly.
Number of Employees	4 (avg.)	Small staff base consistent with company size.

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3. Diagnosis

• Liquidity and Working Capital:
  The company exhibits a persistent symptom of liquidity strain as net current assets remain negative. Although this is an improvement from previous years, it indicates that short-term obligations still outpace readily available assets, which could threaten ongoing operational stability if cash inflows slow.

• Asset Base:
  The asset composition has shifted with a marked decrease in intangible assets (goodwill fully amortised) and a focus on tangible fixed assets (vehicles, equipment). This "leaner asset profile" can be healthier, reducing risk of impairment losses.

• Equity Position:
  The company’s net assets have swung from negative (£-1,899 in 2023) to slightly positive (£238 in 2024). This indicates an improving balance sheet and a return towards solvency. However, the thin equity margin suggests limited financial cushioning against shocks.

• Profitability and Cash Flow:
  While detailed profit and loss data is absent, the improvement in net assets and cash position suggests either operational profitability or effective financial restructuring. The company has managed to rebuild cash reserves significantly, which is a vital "pulse check" of financial health.

• Growth and Stability:
  The average employee number increased, pointing to some business expansion or operational scaling, a positive sign for future viability.

• Risks:
  The negative working capital and modest equity buffer highlight ongoing risks. Continued vigilance on receivables, creditor terms, and cash flow management is crucial.

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4. Recommendations

• Improve Working Capital Management:

  • Tighten credit control to reduce debtor days and accelerate cash collections.
  • Negotiate longer payment terms with suppliers to better align cash outflows with inflows.

• Build Cash Reserves:

  • Maintain or increase cash holdings to buffer liquidity risks.
  • Consider short-term financing options if cash flow gaps emerge.

• Monitor Profitability Closely:

  • Produce regular management accounts to track income and expenses, ensuring operations remain profitable.
  • Identify cost-saving opportunities without compromising service quality.

• Strengthen Equity Base:

  • Consider capital injections or retained earnings reinvestment to bolster shareholder funds.
  • Avoid dividend payments or excessive withdrawals until financial buffers improve.

• Strategic Asset Management:

  • Maintain asset condition and assess the necessity of tangible assets to prevent over-investment.
  • Continue avoiding intangible asset impairment risks by cautious acquisition policies.

• Regular Financial Health Checks:

  • Conduct periodic financial "health screenings" to detect symptoms of distress early.
  • Engage with financial advisors if liquidity or solvency symptoms worsen.

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Medical Analogy Summary

Magenta Inventory and Property Services Limited is showing signs of recovery from a previous state of financial illness, akin to a patient moving from critical care to a monitored recovery phase. The positive net assets and good cash reserves are like a stabilised heartbeat, but the negative working capital is a lingering symptom that requires ongoing treatment to avoid relapse. Careful management of cash flow and liabilities will be the vital medicine to ensure the company returns to full financial health.

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