MILPERTHUSKY LIMITED

Executive Summary

Milperthusky Limited exhibits a solid equity base but faces liquidity challenges, indicated by persistent negative working capital and reliance on director loans. To enhance financial health, the company should focus on improving cash flow management, reducing short-term liabilities, and formalising financing structures. With these steps, the business could stabilize its financial condition and improve its operational resilience.

MILPERTHUSKY LIMITED - Analysis Report

Company Number: 12496343

Analysis Date: 2025-07-29 14:04 UTC

Financial Health Assessment for MILPERTHUSKY LIMITED (Year ending 31 March 2024)

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1. Financial Health Score: C

Explanation:
The company shows a moderate financial position with some concerning signs in liquidity and working capital. While net assets remain positive and substantial relative to share capital, persistent negative net current assets and declining fixed assets hint at operational strain. The absence of an income statement limits full profitability insight, but overall, the company exhibits symptoms of financial stress requiring attention.

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2. Key Vital Signs

Metric	2024 (£)	Interpretation
Fixed Assets	152,299	Significant intangible assets (goodwill) dominate; slight decline over 2 years suggests write-downs/amortisation.
Current Assets	15,946	Low compared to fixed assets; includes cash of £4,897 and debtors £11,049.
Current Liabilities	22,367	Exceeds current assets, resulting in negative net current assets (-£6,421).
Net Current Assets (Working Capital)	-6,421	Negative working capital indicates potential liquidity pressure; company may struggle to meet short-term obligations promptly.
Net Assets (Shareholders' Funds)	145,543	Positive and solid equity base relative to share capital (£100), indicating accumulated reserves.
Director’s Loan	£5,219 owed to director	Indicates reliance on director funding; loan is repayable on demand but interest-free.
Employee Count	4 employees	Small team size consistent with company size and sector (video production).

Additional Observations:

• Goodwill amortisation at 10% per year leads to a reduction in intangible assets.
• Current liabilities have reduced compared to previous years, improving short-term risk but still negative net current assets.
• Trade creditors are relatively low (£1,350), but tax and other creditors are significant (£13,254 and £7,763 respectively).
• Cash on hand is modest and may not provide a sufficient buffer for unforeseen expenses.

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3. Diagnosis: Business Financial Health Analysis

MILPERTHUSKY LIMITED shows a chronic symptom of liquidity strain, evidenced by negative working capital for multiple years. This "unhealthy cash flow" condition suggests the company may face challenges in meeting its short-term liabilities on time without external financing or director support.

The company’s balance sheet remains solvent with net assets well above share capital, indicating no immediate threat of insolvency. The substantial intangible fixed assets (goodwill) represent prior investments in business value or acquisitions, but the amortisation and asset write-down trend suggest that these assets are being "consumed" over time, possibly reflecting reduced future earnings potential.

The director's loan balance decreasing over the year is a positive sign, showing some repayment or reduction in reliance on director funding, but it remains a notable liability that reflects ongoing internal financing needs.

The absence of an income statement (profit and loss) limits the ability to assess profitability, but ongoing negative working capital and declining fixed assets imply the business might be experiencing operational challenges or slower cash conversion cycles.

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4. Recommendations

To improve financial wellness and address the stress signals, the following specific actions are advised:

a. Improve Liquidity and Working Capital Management

• Develop tighter credit control to reduce debtor days and accelerate cash collection.
• Negotiate longer payment terms with suppliers to better align cash outflows with inflows.
• Maintain a cash reserve or access to short-term financing to cover working capital gaps.

b. Review Fixed Asset Utilisation

• Assess the recoverability and ongoing value of goodwill and intangible assets to ensure no further impairment is necessary.
• Consider whether investments in fixed assets are yielding returns or if divestment is appropriate to raise cash.

c. Reduce Reliance on Director Loans

• Formalise repayment plans for director advances to reduce contingent liabilities and improve financial transparency.
• Explore external financing options, such as small business loans or equity funding, to diversify capital sources.

d. Financial Reporting and Monitoring

• Prepare and review full profit and loss accounts regularly to understand operational profitability and cost drivers.
• Implement financial forecasting and budgeting to anticipate liquidity needs and avoid surprises.

e. Operational Efficiency

• Evaluate business processes in video production to identify cost-saving opportunities and improve margins.
• Expand client base or service offerings to increase revenue streams and improve cash inflows.

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Medical Analogy Summary

MILPERTHUSKY LIMITED’s financial “vital signs” show a heart that is pumping but with a weak pulse in liquidity. The persistent negative working capital is akin to a “symptom of distress” in cash flow, risking short-term survival if not corrected. However, the “healthy bone structure” of positive net assets provides a stable frame to build upon. Prompt intervention to restore cash flow health and reduce reliance on director funding could stabilize and improve the company’s financial prognosis.

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