METHODIC PRODUCTIONS LTD

Executive Summary

Methodic Productions Ltd shows early signs of financial strain, with declining net assets and negative working capital indicating liquidity challenges. While still solvent, the company needs to urgently improve cash flow management and review its debt obligations to restore financial health and avoid deeper distress.

METHODIC PRODUCTIONS LTD - Analysis Report

Company Number: 12990020

Analysis Date: 2025-07-20 14:40 UTC

Financial Health Assessment Report for Methodic Productions Ltd

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1. Financial Health Score: C

Explanation:
Methodic Productions Ltd exhibits signs of financial strain primarily due to deteriorating liquidity and a significant decline in net asset value over the last financial year. While the company is still active and solvent, the negative working capital and sharp drop in equity suggest emerging financial distress. The company’s micro-entity status and low employee count indicate a small-scale operation, which may limit financial flexibility. Immediate attention is needed to stabilize and improve the company’s financial position.

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2. Key Vital Signs

Metric	2024 (£)	2023 (£)	Interpretation
Fixed Assets	34,812	47,453	Reduction in long-term assets may indicate asset disposals or depreciation; less capital base.
Current Assets	8,443	4,744	Current assets have increased, which is positive, but still low relative to liabilities.
Current Liabilities	15,069	6,536	More than doubled, signaling rising short-term obligations — a symptom of liquidity pressure.
Net Current Assets (Working Capital)	-6,003	-1,054	Negative and worsening, indicating insufficient short-term assets to cover debts due within 1 year.
Creditors due after 1 year	26,948	29,869	Large long-term liabilities remain substantial and almost stable.
Net Assets (Shareholders’ Funds)	1,861	16,530	Drastic decline in net equity, a critical warning sign of financial weakening.
Share Capital	1	1	Minimal share capital, typical for micro-entities, implies limited equity buffer.

Interpretation of Vital Signs:

• Liquidity: The company shows "symptoms of distress" in liquidity with net current liabilities of £6,003, meaning it does not currently have enough liquid assets to meet short-term debts. This can lead to cash flow problems if not addressed.
• Solvency: The sharp drop in net assets from £16,530 to £1,861 signals erosion of the company’s financial foundation, potentially due to losses or write-downs. However, it remains solvent for now.
• Asset Base: The decline in fixed assets suggests some disposal or impairment, reducing productive capacity or asset backing.
• Leverage: Long-term creditors are significant and have not decreased much, indicating ongoing obligations that may stress finances.

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3. Diagnosis

Methodic Productions Ltd is currently in a vulnerable financial state. The company displays classic "symptoms of financial distress," such as worsening working capital and a steep decline in net equity, which may reflect operational losses or increased liabilities. The negative net current assets indicate the company may struggle to cover short-term debts without additional cash inflows or restructuring.

The stability of long-term debt combined with falling assets and equity hints at potential issues with profitability or asset management. Given the small size and single director operation, the company’s financial wellness depends heavily on managing cash flow and controlling liabilities.

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4. Recommendations

1. Improve Liquidity:

   • Accelerate collection of receivables and manage payables carefully to reduce current liabilities.
   • Consider short-term financing options or injecting additional capital to cover working capital gaps.

2. Review Debt Structure:

   • Engage with creditors to possibly renegotiate terms, extend maturities, or reduce interest burden.
   • Explore options to refinance long-term liabilities to improve cash flow.

3. Asset Management:

   • Evaluate fixed assets for potential sale or better utilization to generate cash or efficiency improvements.
   • Avoid further asset depletion without clear value generation.

4. Profitability Focus:

   • Analyze operational costs and revenue streams to identify loss drivers and areas for improvement.
   • Develop a clear business plan focusing on sustainable growth and cost control.

5. Financial Monitoring:

   • Implement regular financial reviews and cash flow forecasting to detect and address issues early.
   • Consider professional advice to prepare for any potential insolvency risks.

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