NAT ATCHYET RECORDINGS LTD

Executive Summary

NAT ATCHYET RECORDINGS LTD is currently experiencing liquidity strain and a significant reduction in equity, signaling financial stress despite remaining solvent. The sharp drop in cash reserves and working capital highlights the need for improved cash flow and cost management. With targeted actions to enhance liquidity and operational efficiency, the company can stabilize and improve its financial health.

NAT ATCHYET RECORDINGS LTD - Analysis Report

Company Number: 13815496

Analysis Date: 2025-07-29 13:31 UTC

Financial Health Score: C

Explanation: NAT ATCHYET RECORDINGS LTD’s financial health shows signs of stress compared to the previous year. While the company remains solvent with positive net assets, there has been a sharp decline in cash reserves and net current assets, indicating tightening liquidity. The company is not in immediate danger but would benefit from focused actions to stabilize cash flow and working capital.

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Key Vital Signs

Metric	2023 Value	2022 Value	Interpretation
Fixed Assets	£1,564	£299	Modest increase, reflects investment in equipment
Current Assets	£3,530	£23,966	Significant drop, mainly driven by cash decrease
Cash at Bank	£1,515	£23,162	Sharp decline indicates cash flow tightening
Debtors (Trade Receivables)	£2,015	£804	Increased receivables, potential cash conversion lag
Current Liabilities	£2,530	£7,766	Reduced liabilities but still notable short-term debts
Net Current Assets	£1,000	£16,200	Declined substantially, indicating weaker liquidity
Net Assets (Shareholders Funds)	£2,564	£16,499	Reduced equity base, still positive
Share Capital	£10	£10	No change, stable capital structure
Profit & Loss Reserve	£2,554	£16,489	Reduced retained earnings, possibly losses or withdrawals

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Symptoms Analysis

• Liquidity Strain ("Weak Pulse"): The drastic fall in cash from £23,162 to £1,515 is a key symptom. Cash is the lifeblood of any business, and this reduction suggests the company may be struggling to maintain a healthy operational cash flow. This could be due to delayed payments, increased costs, or reduced income.

• Working Capital Contraction ("Shrinking Vital Signs"): Net current assets fell from £16,200 to £1,000, signaling reduced short-term financial cushioning to cover immediate obligations. Although current liabilities decreased, the sharp drop in current assets outweighs this improvement.

• Increased Trade Debtors ("Lingering Symptoms"): Trade receivables more than doubled to £2,015. This could indicate customers are taking longer to pay, which can exacerbate cash flow problems.

• Reduced Equity ("Weakening Core Strength"): Net assets (equity) dropped significantly from £16,499 to £2,564. This indicates the company’s retained earnings have been eroded, possibly by operational losses or distributions.

• Asset Investment ("Attempted Recovery"): The increase in fixed assets from £299 to £1,564 suggests reinvestment in business equipment or infrastructure, which could be a positive sign of growth or modernization efforts.

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Diagnosis

NAT ATCHYET RECORDINGS LTD is currently facing a financial liquidity strain and a reduction in equity, which are symptoms of underlying operational or market challenges. While the company is not insolvent and maintains a positive net asset position, the significant drop in cash and working capital suggests cash flow management is a critical issue. The increase in trade debtors may be prolonging cash conversion cycles, potentially leading to difficulties in meeting short-term obligations without external financing or improved collections.

The company’s investment in fixed assets shows management is attempting to maintain or grow operations, but the overall financial "vital signs" indicate a need for caution. The financial health is currently compromised but not critical, resembling a patient who is recovering from an illness but still requires treatment and monitoring to avoid relapse.

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Prognosis

If the current trends continue, the company risks further liquidity difficulties that could impair its ability to fund day-to-day operations and meet creditor demands. However, if the company can improve cash collection, manage costs, and stabilize or grow revenue, the prognosis could improve, leading to restored financial health.

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Recommendations

1. Improve Cash Flow Management

   • Tighten credit control to reduce debtor days; actively follow up on outstanding invoices.
   • Consider offering early payment discounts or other incentives to accelerate cash inflows.
   • Review payment terms with suppliers to extend outflows where possible without harming relationships.

2. Cost Control and Expense Monitoring

   • Conduct a thorough review of operating expenses to identify and cut unnecessary costs.
   • Monitor fixed asset investments carefully to ensure they generate adequate returns.

3. Strengthen Working Capital

   • Explore short-term financing options (e.g., overdrafts, invoice financing) to bridge liquidity gaps.
   • Consider negotiating longer payment terms with creditors to improve net current asset position.

4. Financial Reporting and Planning

   • Implement regular cash flow forecasting to anticipate and manage liquidity needs proactively.
   • Prepare detailed budgets and variance analyses to detect financial distress signals early.

5. Strategic Review

   • Assess market conditions and revenue streams; diversify if necessary to stabilize income.
   • Evaluate pricing strategies and customer base to improve profitability.

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