NEELAM PARAMOUNT LIMITED

Executive Summary

NEELAM PARAMOUNT LIMITED is financially stable with growing equity and strong working capital, indicating good overall health. However, very low cash reserves and high outstanding debtors suggest liquidity stress that requires urgent attention to improve cash flow management. Addressing these issues will strengthen the company’s financial resilience and operational effectiveness.

NEELAM PARAMOUNT LIMITED - Analysis Report

Company Number: 13033621

Analysis Date: 2025-07-20 12:15 UTC

Financial Health Assessment Report: NEELAM PARAMOUNT LIMITED

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1. Financial Health Score: B

Explanation:
NEELAM PARAMOUNT LIMITED demonstrates a stable financial position with solid net current assets and positive net assets growth over recent years. The company maintains strong working capital, indicating healthy short-term liquidity, but very low cash reserves and high debtor balances pose some risk to cash flow. Overall, the business is financially sound but could improve cash conversion efficiency and liquidity buffers.

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2. Key Vital Signs

Metric	2024 Value (£)	Interpretation
Current Assets	51,060	Adequate short-term resources, mostly in debtors.
Cash at Bank	60	Critically low cash reserves, potential symptom of cash flow stress.
Debtors	51,000	Large outstanding amounts owed to the company; indicates possible delays in collections.
Current Liabilities	8,758	Manageable short-term obligations relative to assets.
Net Current Assets	42,302	Healthy working capital, suggests ability to cover near-term debts.
Net Assets (Equity)	43,825	Strong equity base, indicating overall financial stability and retained earnings growth.
Share Capital	1.00	Minimal, typical for small private companies; not a concern.
Profit and Loss Reserve	43,824	Reflects accumulated profits retained in the business, signaling operational success.

Trend Observations:

• Net assets and net current assets have steadily increased over five years, signaling improving financial strength.
• Cash reserves sharply declined from £24,234 in 2021 to just £60 in 2024, which is a warning sign of liquidity challenges despite overall net asset growth.
• Debtors have grown substantially, now comprising nearly all current assets, signaling potential issues in converting sales to cash promptly.

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3. Diagnosis: Financial Condition Evaluation

NEELAM PARAMOUNT LIMITED exhibits many signs of a financially "fit" company with a growing equity base and consistent net current asset surpluses. The company’s working capital position is strong, indicating that it has more than enough short-term assets to meet its short-term liabilities—a very positive "vital sign" for solvency.

However, the "symptoms" of distress appear in the cash flow dynamics: the extremely low cash balance suggests that although the company is profitable and solvent on paper, it may be facing difficulties in actual cash flow management. The significant portion of current assets tied up in debtors (accounts receivable) points to slow collections or credit management issues. This "illness" can strain the company’s ability to meet immediate expenses and could indicate inefficient cash conversion cycles.

The company operates in the medical practice and nursing home sector, typically reliant on timely payments from patients, insurers, or government bodies. Delays or difficulties in collections here can severely impact operational liquidity.

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4. Recommendations: Prescriptions for Financial Wellness

• Improve Cash Management:
  • Prioritize collection of outstanding debts to convert receivables into cash faster.
  • Tighten credit terms where possible and actively monitor overdue accounts.
• Cash Reserve Building:
  • Consider maintaining a minimum cash buffer to cushion against short-term disruptions or unexpected expenses.
  • Review payment schedules to align outflows better with inflows.
• Operational Review:
  • Investigate causes of slow debtor turnover—billing processes, client payment terms, or disputes—and address them.
• Financial Planning:
  • Prepare cash flow forecasts to anticipate liquidity needs and avoid cash crunches.
• Explore Financing Options if Needed:
  • If cash flow issues persist, short-term financing (e.g., overdraft, invoice factoring) could offer relief but should be used cautiously.
• Maintain Robust Financial Reporting:
  • Continue timely and accurate filings to ensure transparency and maintain stakeholder confidence.

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Medical Analogy Summary:

NEELAM PARAMOUNT LIMITED's financial "heart" beats strongly with growing net assets and sufficient working capital, indicating good overall health. However, the dangerously low "blood flow" of cash signals a liquidity "circulatory issue" that needs addressing to prevent operational fatigue or crisis. By improving cash collection and managing liquidity, the company can restore full financial vitality.

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