MR SMITH FINANCIAL MANAGEMENT LTD

Executive Summary

MR SMITH FINANCIAL MANAGEMENT LTD exhibits solid financial health with strong liquidity and growing net assets, positioning it well for stable operation. However, provisions for liabilities and lack of fixed assets warrant cautious monitoring and strategic planning. By addressing these areas and building capital buffers, the company can enhance its financial wellness and support future growth.

MR SMITH FINANCIAL MANAGEMENT LTD - Analysis Report

Company Number: SC679762

Analysis Date: 2025-07-29 13:04 UTC

Financial Health Assessment: MR SMITH FINANCIAL MANAGEMENT LTD

---

1. Financial Health Score: B

• Explanation: The company demonstrates positive net assets with a healthy increase over recent years, showing good growth and capital retention. Current assets significantly exceed current liabilities, indicating solid short-term liquidity. However, absence of fixed assets and presence of provisions suggests some cautious notes. Overall, the financials are sound but with room for improvement in asset diversification and liability management.

---

2. Key Vital Signs

Vital Sign	2023 Value	Interpretation
Net Assets	£8,526	Positive net worth, increased from £3,980 in 2022, showing retained earnings and growth.
Current Assets	£12,494	Healthy cash and receivables, nearly 9 times current liabilities, signifying strong liquidity.
Current Liabilities	£1,381	Low short-term debts, easily covered by current assets.
Net Current Assets	£12,142	Solid working capital, indicating ability to meet short-term obligations smoothly.
Provisions for Liabilities	£2,235	Presence of provisions can be a cautionary symptom; may relate to future costs or contingencies.
Fixed Assets	£0	No investment in long-term physical assets, typical for a consultancy but limits asset base.
Share Capital	£2.00	Minimal issued capital, typical for micro-entity structure but low equity buffer.
Employee Growth	2 (2023)	Increased headcount from 1 to 2, signaling modest business expansion.

---

3. Diagnosis: Financial Health Overview

• Liquidity & Working Capital: The company shows a "healthy cash flow" symptom, evidenced by current assets far exceeding current liabilities. This indicates strong ability to cover immediate debts, a critical "vital sign" of financial well-being.

• Profitability & Growth: The increase in net assets from £3,980 to £8,526 in one year suggests retained profits or capital injections, a positive "symptom" of profitable operations or effective financial management.

• Asset Structure: Absence of fixed assets is typical for service-based firms like financial management consultancies but limits tangible asset base. The company relies heavily on current assets, which may be mostly cash or receivables.

• Provisions: The recorded provisions (£2,235) indicate anticipated liabilities or future expenses. This "symptom of distress" requires monitoring as it could impact future profitability or cash flow if these liabilities materialize.

• Shareholders’ Equity: The minimal share capital (£2) but increasing shareholder funds suggest profits are retained rather than capital being raised. This is typical for micro-entities but may limit capital available for expansion.

• Employee Headcount: The increase in employees from 1 to 2 is a positive sign of growing operations, but the company remains very small, which might limit economies of scale.

---

4. Recommendations

• Monitor Provisions Closely: Investigate the nature of the provisions. If these represent contingent liabilities or potential expenses, plan for them in cash flow forecasts to avoid sudden liquidity strain.

• Build Fixed Asset Base Where Possible: Consider investing in essential long-term assets (e.g., technology, office equipment) to support growth and increase asset stability.

• Enhance Capital Buffer: Explore opportunities to increase share capital or retained earnings reserves to strengthen financial resilience against unexpected shocks.

• Maintain Strong Working Capital Management: Continue to manage receivables and payables efficiently to preserve healthy liquidity.

• Plan for Growth: With modest employee growth, develop a scalable business plan to increase revenues and profitability while managing costs carefully.

• Regular Financial Reviews: Schedule periodic financial health diagnostics to detect early "symptoms" of financial stress and adjust strategies accordingly.

---