MICHAEL SMITH CONSULTANCY LTD

Executive Summary

Michael Smith Consultancy Ltd has experienced a severe financial decline in its latest reporting period, with liquidity nearly depleted and a substantial operating loss recorded. While the company maintains regulatory compliance and active status, the erosion of net assets and ongoing losses present a high risk to solvency and operational sustainability. Careful further investigation into cash flows and strategic plans is essential before considering investment.

MICHAEL SMITH CONSULTANCY LTD - Analysis Report

Company Number: 13789482

Analysis Date: 2025-07-20 17:08 UTC

1. Risk Rating: HIGH
   The company exhibits significant financial deterioration within the latest financial year, with net assets plunging from £36,815 to £1 and a reported loss of £29,818. The drastic decline in current assets from £36,815 to £1 signals acute liquidity constraints, putting solvency at risk.

2. Key Concerns:

• Liquidity Crisis: Current assets reduced to £1 from £36,815, implying virtually no liquid resources to meet short-term obligations.
• Operating Loss: The company swung from a profit of £29,820 in 2022 to a substantial loss of £29,818 in 2023, with turnover halving, indicating unsustainable operations.
• Capital Erosion: Shareholders’ funds and net assets virtually wiped out, undermining financial stability and increasing risk of insolvency.

3. Positive Indicators:

• Compliance: No overdue filings for accounts or confirmation statements; company status is active and in good standing with Companies House.
• Ownership Control: Single director and majority shareholder (Michael Anthony Smith) maintains full control, which may facilitate swift decision-making.
• Micro-Entity Status: Small scale operations reduce complexity and may limit exposure to large liabilities.

4. Due Diligence Notes:

• Investigate underlying causes of the sharp decline in assets and profitability in 2023, including any extraordinary expenses or one-off write-downs.
• Review cash flow statements and bank balances for liquidity trends and potential shortfall risks.
• Assess business model viability given the significant revenue drop and employee costs exceeding turnover in 2023.
• Confirm absence of contingent liabilities or off-balance sheet obligations not disclosed.
• Verify director’s plans for financial recovery or capital injection to restore solvency.