MIA FABRICS LIMITED

Executive Summary

Mia Fabrics Limited shows promising financial growth with a solid net asset position and positive working capital, signaling early-stage business viability. However, the company's low cash reserves relative to current liabilities and high debtor levels highlight potential liquidity risks that require improved cash flow management. Strengthening cash conversion cycles and maintaining prudent financial controls will be key to sustaining healthy business momentum.

MIA FABRICS LIMITED - Analysis Report

Company Number: 13476743

Analysis Date: 2025-07-29 13:54 UTC

Financial Health Assessment of Mia Fabrics Limited as of 31 May 2024

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1. Financial Health Score: B-

Explanation:
Mia Fabrics Limited demonstrates a stable but modest financial position for a young private limited company. The company shows positive net current assets and shareholders’ funds growth from £100 in 2023 to £27,592 in 2024, indicating emerging profitability and capitalization. However, cash on hand is low relative to current liabilities, and receivables are high, which may point to liquidity pressure or collection challenges. Overall, the company is financially stable but with caution advised on cash flow management.

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2. Key Vital Signs

Metric	Value (2024)	Interpretation
Current Assets	£121,369	Healthy level of current assets, mostly debtors (accounts receivable).
Cash at Bank	£9,280	Low cash reserves relative to liabilities, potential symptom of liquidity strain.
Debtors	£112,089	Large proportion of current assets tied up in receivables, indicating credit risk or slow payments.
Current Liabilities	£96,199	Current obligations are significant but covered by current assets.
Net Current Assets (Working Capital)	£25,170	Positive working capital indicates the firm can meet short-term obligations but margin is narrow.
Shareholders' Funds (Equity)	£27,592	Growth from nominal capital (£100) to positive retained earnings signals increasing net worth.
Fixed Assets (Net Book Value)	£2,422	Minimal investment in tangible fixed assets, typical for a service-based or early-stage company.

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3. Diagnosis: What the Numbers Reveal

• Liquidity Status:
  The company has a positive working capital of £25,170, which is a "healthy pulse" indicating it can cover short-term debts. However, the low cash balance (£9,280) compared to current liabilities (£96,199) suggests the company relies heavily on receivables turning into cash promptly. This is a potential "symptom of distress" if customers delay payments.

• Asset Composition:
  The majority of current assets are debtors (£112,089), meaning the company’s "financial lifeblood" is tied up in amounts owed by customers. This creates vulnerability to credit risk and cash flow interruptions if collection times lengthen.

• Growth and Capitalization:
  Shareholders’ funds have increased markedly within one year, from £100 to £27,592, reflecting accumulated profits and a strengthening financial base. This signals a "recovery and strengthening" phase typical of an early-stage company beginning to stabilize.

• Operational Scale:
  The average number of employees increased from zero to 15, indicating business growth and operational scaling. Fixed assets remain low, which is not unusual for a fabric or business support service company focused on inventory and customer receivables.

• Audit Status and Reporting:
  The company is small and unaudited, which limits external financial scrutiny but is compliant with regulations. Financial statements are abridged and unaudited, so some caution is warranted in interpretation.

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4. Recommendations to Improve Financial Wellness

• Enhance Cash Flow Management:
  Focus on accelerating debtor collections to convert receivables into cash faster. Consider tighter credit terms or incentivizing early payments to ease liquidity constraints.

• Build Cash Reserves:
  Aim to increase cash holdings to comfortably cover at least 1-2 months of current liabilities, providing a buffer against unexpected expenses or payment delays.

• Monitor Credit Risk:
  Implement robust credit checks and monitoring to reduce the risk of bad debts. This will protect the "heart" of the business—the cash inflow from customers.

• Consider Working Capital Financing:
  If cash flow is tight, explore short-term financing options such as overdrafts or invoice factoring to maintain operational flexibility.

• Maintain Accurate Financial Records and Reporting:
  Even though unaudited, ensure rigorous internal controls and accurate bookkeeping to provide reliable financial data for management decisions.

• Plan for Sustainable Growth:
  As the company grows, monitor operational expenses and ensure that scaling does not outpace financial capacity, avoiding "overexertion" risks.

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