MEZZE SOFTWARE LTD

Executive Summary

MEZZE SOFTWARE LTD demonstrates strong liquidity and growing equity, signaling solid financial health and operational expansion. Positive working capital and increasing cash reserves provide a stable foundation, though careful management of receivables and short-term liabilities is recommended to sustain healthy cash flow. Overall, the company is well-positioned for continued growth with prudent financial oversight.

MEZZE SOFTWARE LTD - Analysis Report

Company Number: 13500441

Analysis Date: 2025-07-29 17:44 UTC

Financial Health Assessment for MEZZE SOFTWARE LTD
(as of 31 August 2024 financial year end)

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1. Financial Health Score: B+

Explanation:
MEZZE SOFTWARE LTD shows strong liquidity with healthy cash reserves and net current assets comfortably positive. The company has steadily grown its net assets and shareholders’ funds year-on-year, indicating a robust capital base. However, the company carries a relatively high level of short-term creditors, which, while currently manageable, warrants monitoring. Overall, the company’s financial “vital signs” reflect good health with room to optimize working capital management and creditor terms.

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2. Key Vital Signs

Metric	Value (2024)	Interpretation
Cash at bank and in hand	£153,232	Strong cash position indicating good liquidity and ability to meet immediate obligations. “Healthy cash flow” status.
Debtors (Trade + Others)	£166,488	Moderate increase compared to prior year; implies growing sales but requires efficient collection to avoid cash flow strain.
Current Liabilities	£197,272	Increased significantly from prior year; mainly trade creditors, tax, and accruals. Elevated short-term obligations needing attention.
Net Current Assets (Working Capital)	£122,448	Positive working capital, indicating the company has sufficient short-term assets to cover liabilities—key for operational stability.
Net Assets / Shareholders’ Funds	£126,389	Increasing equity base year-on-year, signaling retained profits and company value growth.
Share Capital	£1.18	Nominal share capital typical for a small private company; does not affect financial health directly.
Average Number of Employees	7	Slight growth in staff indicates business expansion but also increased operational costs.

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3. Diagnosis: What the Financial Data Reveals About Business Health

• Liquidity & Cash Flow:
  The company’s cash balance has nearly doubled from £97k to £153k over the last year, a “strong pulse” indicating good cash generation or funding. Positive net current assets confirm the company’s ability to cover its short-term debts without distress, a vital sign of operational health.

• Growth & Profitability Signals:
  Increasing debtors and prepayments (from £107k to £166k) suggest growing client orders and business activity. However, the company must avoid “symptoms of distress” related to slow collections, which can hamper cash flow. The company has retained earnings reflected in the profit and loss reserve, showing consistent profitability or at least positive retained results over time.

• Liabilities & Obligations:
  Current liabilities nearly doubled, notably due to higher trade creditors, taxation, and accrued income. While this is common in growing businesses due to timing differences in cash outflows (e.g., tax payments, supplier terms), it requires active management to avoid liquidity crunches.

• Capital Structure:
  Shareholders’ funds are solid and rising, indicating a “healthy heart” of equity supporting the business. The company is well-capitalized relative to its size and has no indications of excessive debt or financial leverage.

• Operational Capacity:
  An increase in staff from 3 to 7 employees demonstrates business scaling, which is positive but also introduces higher fixed costs. Continued growth must be balanced with profitability and cash generation.

• Going Concern & Management Outlook:
  The directors affirm the company is a going concern and are willing to support ongoing operations, which provides confidence in financial stability.

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4. Recommendations: Specific Actions to Improve Financial Wellness

1. Enhance Debtor Management:

   • Tighten credit controls and accelerate collections to reduce debtor days, turning receivables into cash faster and improving liquidity.
   • Monitor related party balances to ensure timely payment and avoid concentration risk.

2. Control Current Liabilities Growth:

   • Negotiate better payment terms with suppliers to spread cash outflows more evenly.
   • Review tax payment schedules and accruals regularly to avoid surprises affecting cash flow.

3. Cash Flow Forecasting:

   • Implement rolling cash flow forecasts to anticipate liquidity needs and plan financing or investment decisions accordingly.
   • Maintain a cash buffer to withstand unexpected expenses or delays in payments.

4. Profitability Focus:

   • Continue monitoring expenses associated with employee growth to ensure operational leverage is maintained.
   • Evaluate pricing, cost control, and project profitability regularly.

5. Strategic Planning:

   • Consider staged investment in fixed assets aligned with business growth to avoid overcapitalization.
   • Maintain close oversight of working capital components to prevent “symptoms” of financial strain.

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Summary:
MEZZE SOFTWARE LTD is financially sound with strong liquidity and a growing equity base. The company exhibits positive working capital and steady growth in assets and cash reserves, indicating a “healthy financial pulse.” Attention to debtor management and creditor payment schedules will further strengthen cash flow and operational resilience as the business scales.