Company Number: 13242606

Analysis Date: 2025-07-20 18:05 UTC

Financial Health Assessment for MJW CONSULTING (S.E.) LIMITED
As of 31 March 2024

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1. Financial Health Score: D (Poor Health)

Explanation:
MJW CONSULTING (S.E.) LIMITED shows multiple symptoms of financial distress. The company’s net liabilities position worsened from prior years, with negative net assets and shareholders’ funds. Working capital is negative, indicating a liquidity squeeze. The cash balance is modest but declining. The company is operating with accumulated losses wiping out equity, posing solvency questions. This places the company at grade D, reflecting poor financial health and medium to high risk of financial instability if no corrective measures are taken.

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2. Key Vital Signs

Vital Sign	2024 Value (£)	Interpretation
Net Current Assets (Working Capital)	-10,952	Negative working capital is a red flag, indicating current liabilities exceed current assets; liquidity is tight.
Net Assets / Shareholders’ Funds	-9,601	Negative equity means accumulated losses exceed share capital; company is technically insolvent on a balance sheet basis.
Cash Balance	30,677	Positive cash is a relief but declining from prior year and may not cover short-term liabilities fully.
Current Liabilities	54,936	High current liabilities relative to assets increase solvency risk.
Debtors	13,307	Increasing debtors indicate some receivables but still small relative to liabilities.
Tangible Fixed Assets	1,802	Minimal fixed assets; company appears asset-light, consistent with consultancy business model.
Share Capital	100	Minimal share capital base, limiting buffer against losses.
Employees	1	Small staff base; low overhead, but business scale is limited.

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

MJW CONSULTING (S.E.) LIMITED presents clear symptoms of financial distress akin to a patient with chronic illness:

• Liquidity Stress: Negative working capital means the company may struggle to meet short-term obligations without relying on external funding or additional cash inflows.
• Balance Sheet Insolvency: Negative net assets indicate accumulated losses have eroded shareholders’ equity, posing solvency concerns if this trend continues.
• Operating Scale: Single employee and small fixed assets suggest a lean operation, typical of a consultancy, but limited scale may restrict ability to generate sufficient profits to recover losses.
• Cash Flow Concerns: Although the company holds some cash, the decline in cash balances and ongoing negative net current assets are symptoms of cash flow strain.
• Dividend Practice: Dividends have been drawn over the profit and loss reserve, which implies the company may have distributed more to shareholders than it has earned, exacerbating capital depletion.
• No Audit Requirement: The company’s exemption from audit means external validation of financial health is absent, increasing reliance on internal management controls.

Overall, the company resembles a patient with chronic liquidity and solvency issues, requiring intervention to avoid financial collapse.

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4. Recommendations: Specific Actions to Improve Financial Wellness

• Improve Cash Flow Management: Tighten credit control to reduce debtor days and accelerate cash inflows. Negotiate extended payment terms with creditors to ease immediate cash pressure.
• Review Cost Base: Given the single employee structure, ensure costs are strictly managed. Avoid discretionary expenses and consider operational efficiencies.
• Capital Injection: Consider increasing share capital or seeking shareholder loans to restore positive equity and provide a buffer for working capital.
• Profitability Focus: Develop a clear plan to increase turnover and margins. As a consultancy, focus on winning higher-value contracts and improving billing efficiency.
• Dividend Suspension: Cease dividend payments until profitability and positive retained earnings are restored to rebuild capital reserves.
• Regular Financial Monitoring: Implement monthly cash flow forecasting and management accounts to detect early warning signs and manage liquidity proactively.
• Explore Funding Options: If cash flow remains tight, explore external funding—be it bank overdrafts, invoice financing, or investor funding—to support operations.
• Director Oversight: The director should remain vigilant about the company’s going concern status and seek professional advice if insolvency risks increase.

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