Company Number: 12602125

Analysis Date: 2025-07-20 18:08 UTC

Financial Health Assessment Report for NGL Technology Ltd (as of 31 May 2024)

---

1. Financial Health Score: B+

Explanation:
NGL Technology Ltd demonstrates a solid financial position with healthy liquidity, positive net assets growth, and steady shareholder equity. The company shows strong working capital management and increasing retained earnings, reflecting profitability and prudent cash flow management. Minor concerns arise from a modest decline in tangible assets and relatively high current liabilities compared to peers, but overall, the company is financially stable and well-positioned for growth.

---

2. Key Vital Signs

Metric	2024 Value (£)	Interpretation
Net Current Assets (Working Capital)	46,533	Healthy positive working capital indicates the company can comfortably meet short-term obligations.
Cash & Cash Equivalents	48,169	Strong cash reserves provide liquidity buffer and operational flexibility ("healthy cash flow").
Current Liabilities	34,070	Moderate level relative to assets but manageable given cash and debtor balances.
Debtors	32,434	Reflects considerable receivables; manageable but requires monitoring for timely collection.
Net Assets (Equity)	53,268	Indicates net positive value; increasing from prior years showing retained profitability.
Share Capital	100	Nominal share capital; company value mainly in retained earnings and operational assets.
Tangible Fixed Assets	8,450	Decline from previous year suggests depreciation or asset disposal; a symptom worth monitoring.
Profit & Loss Reserve	53,168	Accumulated profits demonstrating sustained earnings retention and reinvestment capability.
Staff Numbers	3	Small team size consistent with micro/small IT consultancy; efficiency likely key operational focus.

---

3. Diagnosis

• Liquidity & Cash Flow:
  The company has a "healthy cash flow" indicated by a cash balance (£48k) exceeding current liabilities (£34k). This provides strong short-term financial resilience and reduces distress symptoms such as cash crunches or reliance on credit.

• Working Capital:
  Positive net current assets (£46.5k) show good operational liquidity. The company’s ability to cover short-term debts comfortably indicates sound day-to-day financial health.

• Profitability & Equity Growth:
  The equity base (shareholders’ funds) has grown significantly from £38.3k in 2023 to £53.3k in 2024, reflecting profitable operations and retained earnings accumulation. This is a positive "vital sign" of overall business wellness.

• Asset Management:
  The reduction in tangible fixed assets (from £12k to £8.4k) may signify aging equipment or asset disposals. While not immediately alarming, it warrants attention to ensure assets remain adequate for business needs.

• Debtor Management:
  Trade debtors have increased slightly but remain within a manageable range. Efficient debtor collection is essential to maintain liquidity and prevent potential cash flow "symptoms of distress."

• Capital Structure:
  The company operates with minimal share capital (£100), typical for private limited companies. The bulk of the financial strength is in retained earnings, which is positive but suggests reliance on operational profits rather than external equity funding.

• Size & Scale:
  With a small employee base (3 staff), the company fits within the micro/small category and likely keeps overheads low, which supports financial stability.

---

4. Recommendations

1. Asset Renewal Planning:
   Consider scheduling capital expenditure to replace or upgrade tangible assets. Maintaining up-to-date equipment is crucial in IT consultancy to avoid operational inefficiencies or technology obsolescence.

2. Strengthen Debtor Controls:
   Implement or review credit control procedures to ensure debtors are collected promptly, preserving liquidity and reducing risk of bad debts.

3. Monitor Liability Trends:
   Keep an eye on current liabilities, especially tax and social security obligations, to avoid potential strain on cash flow.

4. Strategic Growth & Investment:
   With strong retained earnings, the company might explore investment opportunities such as expanding service offerings, marketing, or hiring to support growth.

5. Financial Reporting & Auditing:
   Although exempt from audit, periodically reviewing financial controls and perhaps commissioning an external review could enhance confidence for stakeholders.

---