NAVNEET CREATION LTD

Executive Summary

NAVNEET CREATION LTD is currently financially stable with positive net assets and working capital, indicating overall good health. However, a significant rise in short-term liabilities signals emerging liquidity pressures that warrant close monitoring and proactive cash flow management. The company should focus on strengthening liquidity, optimizing working capital, and retaining earnings to maintain robust financial wellness going forward.

NAVNEET CREATION LTD - Analysis Report

Company Number: 13029737

Analysis Date: 2025-07-20 13:39 UTC

Financial Health Assessment: NAVNEET CREATION LTD (Year ending 30 November 2023)

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1. Financial Health Score: B-

Explanation:
NAVNEET CREATION LTD presents a generally stable financial position with positive net current assets and shareholders’ funds. However, there is a notable increase in current liabilities compared to the previous year, which raises caution. The company remains solvent but shows early "symptoms of financial strain" that should be monitored closely to maintain a healthy cash flow.

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2. Key Vital Signs (Critical Metrics and Interpretation):

Metric	2023 (£)	2022 (£)	Interpretation
Fixed Assets	2,058	2,421	Stable but minimal investment in long-term assets.
Current Assets	73,417	40,742	Healthy growth in liquid assets (cash/debtors).
Current Liabilities	56,511	21,214	Sharp rise in short-term debts—a symptom of liquidity pressure.
Net Current Assets (Working Capital)	16,906	19,528	Positive but decreased working capital; watch liquidity.
Total Assets Less Current Liabilities	18,964	21,949	Overall asset base slightly declined after liabilities.
Shareholders’ Funds (Equity)	18,964	21,949	Equity decreased, indicating a slight erosion of net worth.
Dividends Paid	15,000	10,000	Increasing dividends suggest confidence but reduce retained earnings.
Average Employees	3	1	Growth in workforce may increase operational costs.

Interpretation of Vital Signs:

• The company’s working capital remains positive, reflecting a generally "healthy cash flow," but the decrease from £19,528 to £16,906 shows some tightening in liquidity.
• The significant increase in current liabilities (from £21,214 to £56,511) is a "red flag" or "symptom of distress" that could indicate either growing short-term obligations or delayed payments to suppliers.
• The reduction in shareholders' funds by about £3,000 suggests the company’s net worth is contracting slightly, which may affect its ability to raise funds or absorb future shocks.
• Payment of increasing dividends while equity decreases might also be a signal that the company is distributing profits rather than retaining cash to strengthen reserves.

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3. Diagnosis: Overall Financial Condition

NAVNEET CREATION LTD is operating as a small, active private limited company in the business support services sector. The company shows signs of reasonable operational activity with an expanding workforce and growing current assets. The "vital signs" indicate the company is solvent with positive net assets and working capital, which are encouraging markers of financial health.

However, the sharp increase in current liabilities compared to the previous year suggests emerging liquidity pressure. This could be due to increased short-term borrowing, delayed payments, or accrued expenses. While the company is not yet in distress, this trend requires attention to avoid future cash flow crises. The payment of dividends amid declining equity further supports the need for careful cash management.

In summary, the company is in a stable but cautious financial state—functioning well but showing "early symptoms" that, if unchecked, could lead to cash flow constraints.

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4. Recommendations for Financial Wellness Improvement

• Strengthen Liquidity Management:
  Review and manage the increase in current liabilities. Negotiate longer payment terms with suppliers or seek to reduce short-term debts to prevent liquidity squeeze.

• Optimize Working Capital:
  Accelerate debtor collections and control stock levels to maintain or increase net current assets and ensure smooth operational cash flow.

• Retain Earnings for Buffer:
  Consider reducing dividend payouts temporarily to retain earnings and bolster shareholders’ funds, creating a financial cushion against unforeseen expenses or downturns.

• Monitor Expense Growth:
  With the increase in employees, ensure that revenue growth justifies higher operational costs to maintain profitability.

• Regular Financial Health Checks:
  Implement routine financial reviews akin to health check-ups to detect early warning signs and take corrective action promptly.

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