Company Number: 13131364

Analysis Date: 2025-07-20 17:36 UTC

Financial Health Assessment Report: MG DATABI LTD
(as of financial year ending 31 January 2024)

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1. Financial Health Score: D (Poor)

Explanation:
The company exhibits significant signs of financial strain, primarily due to persistent negative working capital (net current liabilities) and near-zero net assets. While the company remains active and compliant with filing requirements, its liquidity position is weak, limiting operational flexibility. The minimal shareholder funds and very low equity cushion heighten financial vulnerability.

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2. Key Vital Signs

Metric	2024 Value (£)	Interpretation
Fixed Assets	2,374	Very low fixed asset base, typical for a micro IT consultancy; not a concern alone.
Current Assets	32,859	Cash and receivables are modest but insufficient relative to short-term debts.
Current Liabilities	34,870	Short-term debts slightly exceed current assets, indicating liquidity pressure.
Net Current Assets	-2,011	Negative working capital ("symptom of distress"), meaning company may struggle to meet short-term obligations on time.
Net Assets / Equity	3	Extremely thin equity base, indicating almost no financial buffer against losses or shocks.
Share Capital	2	Minimal invested capital, suggesting reliance on operational cash flow or credit.
Average Employees	0	No employees, likely subcontracted or owner-managed, limiting fixed overheads but also growth capacity.

Trend Notes:

• Net current liabilities improved slightly from previous years but remain negative.
• Net assets have eroded drastically from £3,984 in 2021 to only £3 in 2024, showing depletion of reserves or accumulated losses.

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3. Diagnosis

The company is showing clear "symptoms of financial distress" primarily due to its negative working capital and near-zero net worth. Negative net current assets indicate the firm’s short-term liabilities exceed its liquid assets, which may impede smooth day-to-day operations, such as paying suppliers or meeting other immediate obligations.

The erosion of net assets over three years signals weak profitability or possible cash drain, which is concerning for sustainability. The lack of employees suggests a very lean operation, possibly heavily dependent on the director or subcontracted work. The company is still solvent but is walking a tightrope financially, with minimal buffer for unexpected expenses or downturns.

The business model as an IT consultancy with low fixed assets is consistent, but the financial structure needs strengthening. The company’s current financial "vital signs" are fragile, and without intervention, there is a risk of deeper liquidity issues.

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4. Recommendations

To improve financial wellness and build a healthier financial foundation, MG DATABI LTD should consider the following actions:

1. Improve Liquidity:

   • Negotiate extended payment terms with creditors to reduce current liabilities pressure.
   • Accelerate collection of receivables or increase cash reserves through upfront payments or deposits.

2. Strengthen Capital Base:

   • Consider a capital injection from shareholders or new investors to bolster equity and provide a cushion against losses.
   • Retain earnings within the business rather than distributing profits to build reserves.

3. Cost Management:

   • Maintain low fixed costs but monitor any increases carefully.
   • Explore opportunities to increase revenues through new clients or higher-margin projects.

4. Financial Monitoring:

   • Implement regular cash flow forecasting to anticipate shortfalls.
   • Seek professional advice to review pricing, costs, and financial controls.

5. Governance and Compliance:

   • Continue timely filing to avoid penalties or reputational damage.
   • Maintain transparent communication with stakeholders about financial health.

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