Company Number: 13110552

Analysis Date: 2025-07-20 11:52 UTC

Financial Health Assessment for NC SUPPLIES LTD

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1. Financial Health Score: D

Explanation:
The company exhibits symptoms of financial distress, primarily reflected by negative net assets and net current liabilities in its latest fiscal year. While there is growth in fixed and current assets, the sharp increase in current liabilities has overwhelmed liquidity, indicating a precarious financial position. This warrants a "D" grade, signaling significant caution and need for remedial action.

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2. Key Vital Signs

Metric	2024 (£)	Interpretation
Fixed Assets	7,403	Increased from previous years; some investment in long-term assets. Healthy sign if productive assets.
Current Assets	29,374	Significant increase, likely cash or receivables; suggests some liquidity improvement.
Current Liabilities	65,560	Sharply increased, more than double prior year; major red flag indicating high short-term debt.
Net Current Assets (Working Capital)	-36,186	Negative and worsening; indicates inability to cover short-term obligations with liquid assets.
Net Assets (Shareholders’ Funds)	-28,783	Negative, meaning liabilities exceed assets; signals insolvency risk on balance sheet.
Share Capital	3.00	Nominal capital; does not support financial stability.
Employee Count	1	Very small operation; low overhead but limited scale.

Interpretation:

• The large jump in current liabilities relative to current assets creates a liquidity crunch, akin to a patient whose blood pressure (liquidity) is dangerously low.
• Negative net assets reflect underlying "organ failure" in financial terms, meaning debts outweigh assets, raising solvency concerns.
• The increase in fixed assets is a positive sign but overshadowed by the liabilities burden.

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3. Diagnosis

NC SUPPLIES LTD is currently in a fragile financial state. The company’s balance sheet reveals troubling symptoms of financial distress — notably, a sharp rise in short-term creditors that the company’s current assets cannot cover. This signals poor liquidity management or possible over-reliance on short-term financing. Negative net assets indicate that the company’s total liabilities exceed its total assets, a serious warning akin to a patient with critical organ function impairment.

Despite the worrying balance sheet, the directors assert confidence in the company’s growth and profitability, suggesting that operational performance (profit & loss) may be improving but is not yet reflected in balance sheet strength. The company operates in management consultancy, a sector that typically demands low fixed asset investment but strong cash flow management. Here, the asset values and liability structure mismatch suggests either aggressive creditor terms or delayed cash inflows.

The small scale of the business (single employee, micro-entity reporting) limits its financial resilience. The company's going concern statement by directors signals belief in recovery, but this must be monitored closely.

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4. Recommendations

Immediate Actions:

1. Improve Liquidity Management:

   • Prioritize collection of receivables and reduce short-term liabilities.
   • Negotiate extended payment terms with suppliers or creditors to ease cash flow pressure.
   • Consider short-term financing options only if they do not exacerbate current liabilities.

2. Cost Control and Operational Efficiency:

   • Review all expenses to identify and cut non-essential costs.
   • Optimize billing and revenue recognition to accelerate cash inflows.

3. Capital Injection:

   • Seek additional equity or shareholder loans to bolster net assets and improve solvency.
   • Explore external funding options if growth prospects justify investment.

4. Financial Monitoring:

   • Establish rigorous monthly cash flow forecasting and monitoring to detect early signs of distress.
   • Engage financial advisors or accountants to provide detailed profitability and cash flow analysis.

5. Strategic Review:

   • Assess business model viability given the financial strain.
   • Consider restructuring options if liabilities remain unmanageable.

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Medical Analogy Summary

The company’s financial "vital signs" show dangerously low liquidity and negative net worth, akin to a patient with low blood pressure and organ stress. While some "tissue" (assets) growth is observed, the overwhelming "infection" (liabilities) threatens overall health. Immediate "treatment" through liquidity improvement, cost control, and capital support is essential to stabilize and promote recovery.

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