NGEZI COMPANY LIMITED

Executive Summary

NGEZI COMPANY LIMITED has improved from a previous year of financial distress but remains in a fragile state with minimal equity and no cash reserves. The company’s reliance on trade debtors to fund operations poses liquidity risks, though recent positive net assets indicate early recovery. Strengthening cash flow management and building shareholder funds are critical next steps to ensure financial wellness and resilience.

NGEZI COMPANY LIMITED - Analysis Report

Company Number: 13918908

Analysis Date: 2025-07-29 12:35 UTC

Financial Health Assessment: NGEZI COMPANY LIMITED (as of 28 February 2024)

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1. Financial Health Score: C

Explanation:
NGEZI COMPANY LIMITED shows a modest recovery from the previous year's negative net asset position but remains fragile. The company's net assets are positive but minimal (£200), indicating a borderline financial state. While there are signs of improvement, the overall financial "vital signs" suggest caution, as key liquidity and solvency indicators are weak and the cash position is non-existent.

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2. Key Vital Signs

Metric	2024 Value	Interpretation
Fixed Assets	£5,200	Small but growing asset base (mainly a laptop investment)
Current Assets	£5,100	Predominantly trade debtors; no cash reserves
Cash	£0	No immediate cash availability, a symptom of potential liquidity stress
Current Liabilities	£4,900	Trade creditors roughly equal to current assets, tight working capital
Net Current Assets	£200	Marginal positive working capital, barely enough to cover short-term debts
Total Net Assets	£200	Very thin equity buffer; low shareholder funds
Shareholders’ Funds	£200	Equality with net assets confirms limited capital
Year-on-Year Net Asset Change	Improved from negative £8,100 in 2023 to +£200 in 2024	Positive turnaround but still minimal buffer

Interpretation:

• The company has no cash on hand, relying entirely on debtors to fund operations. This is akin to a patient with no direct energy reserves, depending on incoming nutrients (payments) to survive.
• Current liabilities closely match current assets, indicating a fragile liquidity position where any delay in debtor payments could cause operational strain.
• The significant improvement from a negative net asset position in 2023 to a positive albeit small net asset base in 2024 is a good sign — the "symptom of distress" (negative equity) has been partially resolved.
• The company’s fixed assets have increased, reflecting some investment in equipment (noted as a laptop), which could support operational capacity.

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3. Diagnosis

NGEZI COMPANY LIMITED exhibits signs of early-stage recovery but remains in a delicate financial state. The company is functioning with minimal equity and almost no liquid cash reserves, which could restrict its ability to manage unexpected expenses or delays in receivables collection. The reliance on trade debtors (owing £5,100) as the primary current asset is a risk factor, as any non-payment or slow payment could rapidly deteriorate liquidity.

The "healthy cash flow" needed for smooth operations is questionable given zero cash balance and current liabilities nearly equalling current assets. However, the turnaround from a significant negative net asset position the previous year suggests management is addressing past financial stress.

There is no indication of formal insolvency processes such as administration or liquidation, and the company is up to date with filings, which is positive.

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4. Recommendations

• Strengthen Cash Reserves: Aim to convert debtors into cash more rapidly to build a cash buffer. Consider incentivizing faster payments or tightening credit terms to reduce liquidity risk.
• Manage Creditors Proactively: Negotiate extended payment terms with suppliers to better align outflows with inflows and maintain working capital stability.
• Monitor Debtor Quality: Assess the collectability of trade debtors carefully to avoid bad debt write-offs that could erode the fragile equity base.
• Build Shareholder Funds: Consider additional capital injection or retained earnings growth strategies to build a stronger equity cushion—this is the company's financial immune system.
• Expense Control: Maintain tight control over operating expenses to avoid cash burn, given the thin net asset position.
• Prepare for Contingencies: Develop contingency plans for cash flow shortfalls, including access to short-term credit facilities or overdrafts if necessary, but use cautiously.
• Regular Financial Monitoring: Implement frequent financial reviews to detect early warning signs of distress ("symptoms") and respond proactively.

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