Company Number: 13111253

Analysis Date: 2025-07-20 12:42 UTC

Financial Health Assessment: MORGAN GRAY ASSOCIATES LIMITED

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1. Financial Health Score: B

Morgan Gray Associates Limited shows solid financial foundations with healthy liquidity and positive net assets, though there is a noticeable decline in net assets and working capital from the previous year, signaling caution. The company demonstrates good short-term financial resilience but should monitor recent downward trends to avoid symptoms of financial stress.

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2. Key Vital Signs

Metric	31-Jan-2024	31-Jan-2023	Interpretation
Current Assets	£191,986	£298,878	Adequate short-term assets to cover liabilities, but a significant decrease from last year.
Cash at Bank	£102,628	£172,619	Cash position remains healthy but has reduced notably, indicating a potential tightening of cash flow.
Debtors	£89,358	£126,259	Decrease in amounts owed to the company reduces cash conversion risk but may indicate lower sales or tighter credit control.
Current Liabilities	£63,786	£102,066	Reduced short-term obligations improve liquidity but requires assessment of whether payable management is delaying payments.
Net Current Assets (Working Capital)	£128,200	£196,812	Positive working capital indicates ability to meet short-term obligations, though reduced by ~35%.
Net Assets (Equity)	£132,969	£201,636	Solid equity base but a significant drop (~34% decline) suggests profits were lower or distributions made.
Share Capital	£100	£100	Minimal share capital typical of small private companies; equity mainly from retained earnings.
Operating Lease Commitments	£16,445	£30,908	Reduced lease obligations ease fixed cost burden, beneficial for cash flow management.
Number of Employees	6 (avg)	4 (avg)	Small growing workforce consistent with micro/small company profile.

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3. Symptoms Analysis

• Liquidity and Cash Flow: The company has a "healthy cash flow pulse" with cash balances comfortably exceeding current liabilities, suggesting no immediate liquidity distress. However, the drop in cash by approximately 40% year-over-year is a sign to monitor cash inflows and outflows carefully to avoid future cash crunches.

• Working Capital: Positive and sufficient working capital indicates the company can cover its short-term debts without resorting to external financing. However, the sharp decrease signals a potential tightening of operational efficiency or changes in business volume.

• Profitability & Equity: The sharp decline in net assets and retained earnings suggests the company may have experienced a year with reduced profitability or possibly paid out dividends or faced exceptional expenses. The absence of an income statement limits definitive conclusions, but the symptom is akin to a "weakened immune response" requiring attention.

• Balance Sheet Strength: Fixed assets remain low relative to current assets, typical for a service company in employment placement, indicating low capital intensity and flexibility.

• Credit Management: Reduction in debtors could indicate improved collection or decline in sales. The company should ensure debtors are collected promptly to maintain liquidity.

• Commitments and Obligations: Reduced lease commitments lower fixed overheads, which is positive for financial health especially in uncertain market conditions.

• Growth Indicators: Increase in staff headcount shows operational scaling but requires commensurate revenue growth to maintain financial health.

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4. Diagnosis

Morgan Gray Associates Limited is currently financially stable with a solid balance sheet and positive working capital, indicating a generally healthy condition. The company is like a patient with a strong baseline but showing early "symptoms" of stress reflected by declining net assets and liquidity reserves. This could be due to a challenging trading year, increased costs, or strategic investments impacting retained earnings.

Without an income statement, it’s difficult to pinpoint exact causes, but the financial "vitals" suggest vigilance is needed. The company should monitor cash flow closely and manage working capital efficiently to prevent slipping into distress.

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5. Prognosis

If the company addresses current downward trends in liquidity and equity by improving profitability or managing costs, it should maintain good financial health. However, if these trends continue unchecked, symptoms may worsen, leading to potential cash flow issues or weakened capital buffers.

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6. Recommendations

• Cash Flow Management: Implement rigorous cash flow forecasting and control measures to ensure liquidity remains strong. Consider improving debtor collection processes to accelerate cash inflows.

• Profitability Analysis: Conduct a detailed review of income and expenditure to identify and address causes of reduced retained earnings.

• Cost Control: Review operating lease and other fixed commitments regularly to retain flexibility and reduce financial strain.

• Working Capital Optimization: Maintain positive net current assets by balancing debtor and creditor days effectively.

• Financial Reporting: Consider providing fuller financial disclosures including profit and loss accounts to better diagnose financial health and make informed decisions.

• Strategic Planning: Prepare for possible economic or sectoral challenges by building reserves and controlling growth to sustainable levels.

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