Company Number: 12624939

Analysis Date: 2025-07-29 14:28 UTC

Financial Health Assessment Report for NAGAMMA LIMITED

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1. Financial Health Score: D

Explanation:
The company’s financial health is currently poor, with significant signs of distress apparent in its balance sheet. Despite being an active micro-entity, the company has moved from a modestly positive net asset position in prior years to substantial net liabilities as of the latest financial year. This decline indicates "symptoms" of financial strain that require urgent attention.

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2. Key Vital Signs

Metric	2024 (£)	2023 (£)	Interpretation
Current Assets	490	12,000	Drastic reduction in liquid and short-term assets, indicating weakening ability to cover debts.
Current Liabilities	10,193	13,262	Slight improvement in liabilities but still significantly high relative to assets.
Net Current Assets (Liabilities)	-9,703	-1,262	Negative working capital signals cash flow "hypoxia" – insufficient resources to meet short-term obligations.
Net Assets (Shareholders’ Funds)	-9,703	-1,262	Negative equity indicates the company’s liabilities exceed its assets, a critical financial "illness".
Average Number of Employees	7	3	Increased staffing suggests growth in operations, but funding may be stretched.
Share Capital	£1.00	£1.00	Minimal share capital, common for micro-entities, but no buffer against losses.

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3. Diagnosis

The company shows acute financial distress:

• Negative net assets as of 31 May 2024 (-£9,703) represent a severe imbalance where liabilities exceed assets, analogous to a patient with a dangerously low blood pressure—indicating poor financial stability.
• The sharp decline in current assets from £12,000 to £490 suggests a loss of liquidity, a vital sign of healthy cash flow. This implies the company may struggle to pay its short-term debts as they fall due.
• Current liabilities remain high relative to assets, indicating ongoing obligations that are not fully covered by readily available resources.
• The increase in employee count from 3 to 7 may suggest operational expansion but without corresponding financial resources, this could exacerbate cash flow strain.
• The company is classified as a micro-entity, so it has simpler filing and reporting requirements, but the financial figures reveal underlying operational and funding challenges.
• No shareholders or persons with significant control are listed, which may imply limited external financial support.

In medical terms, NAGAMMA LIMITED is showing symptoms of financial distress, such as "poor circulation" of working capital and "organ strain" in the form of increasing liabilities and declining liquidity. Without intervention, this condition could worsen, potentially leading to insolvency.

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4. Recommendations

To improve financial wellness, the company should consider the following actions:

• Immediate Cash Flow Management:
  Prioritize improving liquidity by accelerating receivables, negotiating extended payment terms with creditors, or liquidating non-essential assets to restore a healthy cash flow rhythm.

• Cost Control and Operational Efficiency:
  Review staffing and operational costs to ensure they align with revenue generation. The increase in employees should translate into increased income; if not, scaling back may be necessary to reduce overhead.

• Capital Injection:
  Seek additional equity investment or loans to strengthen the capital base and reduce net liabilities. Even a micro-entity benefits from a stronger capital buffer during growth phases.

• Financial Monitoring:
  Implement monthly cash flow forecasts and financial reviews to detect early warning signs and manage "symptoms" proactively.

• Professional Advice:
  Engage with financial advisors or turnaround specialists to explore restructuring options, including debt renegotiation or alternative funding avenues.

• Compliance and Governance:
  Maintain timely filing of accounts and confirmation statements to avoid penalties and maintain stakeholder confidence.

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