NEW TRANSITION BUILDS LIMITED

Executive Summary

NEW TRANSITION BUILDS LIMITED is currently maintaining good short-term liquidity with healthy working capital, but the recent increase in long-term debt and reduced net assets indicate emerging financial risks. The company is stable but requires prudent debt management and focus on profitability to strengthen its financial position. With attentive financial stewardship, the outlook remains cautiously optimistic.

NEW TRANSITION BUILDS LIMITED - Analysis Report

Company Number: 13904519

Analysis Date: 2025-07-20 11:53 UTC

Financial Health Assessment for NEW TRANSITION BUILDS LIMITED

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1. Financial Health Score: C

Explanation:
This company shows a modest financial position typical of a micro-entity in early development stages. While it maintains positive net assets and working capital, the significant increase in long-term liabilities and reduction in net assets signals emerging financial stress. The score "C" reflects a stable but cautious outlook requiring active management to avoid potential liquidity or solvency issues.

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2. Key Vital Signs

Metric	2024 Value (£)	Interpretation
Fixed Assets	5,000	Stable investment in long-term assets, low but consistent for a micro business.
Current Assets	22,216	Healthy increase, indicating improved cash or receivables availability ("healthy cash flow").
Current Liabilities	5,000	Short-term obligations remain manageable relative to current assets.
Net Current Assets (Working Capital)	17,216	Strong positive working capital, sign of good short-term liquidity ("good circulation").
Creditors due after one year	20,000	New long-term debt introduced, increasing financial leverage ("symptom of growing debt").
Net Assets (Shareholders' Funds)	2,216	Declined from prior year, indicating reduced equity buffer ("weakened financial immunity").
Employee Count	1	Very small workforce, typical for micro-entity.

Notes:

• The company’s net current assets expanded significantly from £252 to £17,216, indicating improved liquidity or cash reserves.
• However, the introduction of £20,000 in long-term liabilities (absent in prior year) has reduced net assets from £5,252 to £2,216, suggesting increased financial risk through borrowing or deferred obligations.
• The company remains a micro-entity with limited operational scale and only one employee, indicating a small operational footprint.

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3. Diagnosis: Financial Condition Overview

• Liquidity: The company currently enjoys healthy liquidity as shown by its strong net current assets, meaning it can cover short-term debts comfortably. This is akin to a patient whose vital signs (cash flow) are stable and strong.
• Leverage: The emergence of a £20,000 long-term creditor is a notable symptom of financial stress or investment need. This debt raises the company’s leverage, which if not managed carefully, could strain cash flows in the future. Think of this as the onset of a chronic condition that requires monitoring.
• Equity Position: The reduction in net assets suggests that accumulated reserves or retained earnings have been depleted, possibly due to losses or dividend payments, weakening the financial "immune system."
• Operational Scale: With only one employee and micro-entity status, the company is in early growth or startup phase with limited operational complexity. This limits both risk and opportunity.

Overall, the company is stable but shows early signs of financial strain from increased long-term liabilities and reduced equity. It is not yet in distress but needs close attention to debt servicing and profitability to maintain health.

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4. Recommendations to Improve Financial Wellness

• Manage Debt Prudently: Review terms and necessity of the £20,000 long-term liability. Explore refinancing options with lower interest or longer terms to reduce immediate cash flow pressure.
• Enhance Profitability: Focus on increasing revenues and controlling costs to rebuild equity and reserves. Regularly monitor profit margins and cash flows to catch any negative trends early.
• Strengthen Working Capital Management: Maintain or improve cash conversion cycles—collect receivables promptly and manage payables efficiently to preserve liquidity.
• Plan for Growth: Consider gradual scaling of operations and workforce to increase turnover while keeping overheads manageable.
• Regular Financial Reviews: Implement monthly or quarterly financial health checks (akin to routine medical check-ups) to monitor vital signs and adjust strategies proactively.

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