NICHOL CONSULTING LTD

Executive Summary

NICHOL CONSULTING LTD is financially stable but showing early warning signs of liquidity tightening and declining net assets. Strengthening cash flow management and profitability monitoring will be key to maintaining healthy financial status. With appropriate measures, the company can ensure sustainable growth in its specialised construction niche.

NICHOL CONSULTING LTD - Analysis Report

Company Number: 13478501

Analysis Date: 2025-07-29 16:05 UTC

Financial Health Assessment for NICHOL CONSULTING LTD as of 30 June 2024

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1. Financial Health Score: B-

• Explanation: The company shows a stable financial position with positive net assets and working capital, indicating a generally healthy financial state for a micro-entity in its early years. However, the decline in net assets and net current assets over the last year signals caution flags that require attention to avoid potential liquidity or profitability issues in the future.

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2. Key Vital Signs

Metric	2024 Value (£)	2023 Value (£)	Interpretation
Fixed Assets	28,400	23,419	Increase in long-term assets suggests reinvestment or capital improvements — generally healthy.
Current Assets	24,553	34,263	Noticeable decrease in liquid or short-term assets; could indicate cash outflows or reduced receivables.
Current Liabilities	13,486	8,277	Increase in near-term obligations is a symptom of growing short-term financial pressure.
Net Current Assets (Working Capital)	11,067	25,986	Sharp reduction indicates tightening liquidity, a symptom of potential cash flow stress.
Net Assets (Shareholders’ Funds)	39,467	49,405	Decreasing net worth is a warning sign; company retains equity but is eroding capital base.
Average Employees	1	1	Small staff size consistent with micro company status; limits operational scale.

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3. Diagnosis: Financial Condition Overview

NICHOL CONSULTING LTD operates as a micro private limited company in the specialised construction sector, with a sole director and employee. The company’s financial "vital signs" point to a generally stable but slightly weakening financial condition:

• Healthy Signs:

  • Positive net assets demonstrate the company remains solvent with more assets than liabilities.
  • Investments in fixed assets indicate a commitment to sustaining or expanding operational capacity.
  • Compliance with filing deadlines and no signs of overdue accounts or returns reflect good governance and regulatory health.

• Symptoms of Distress:

  • Decrease in current assets combined with increased current liabilities results in a marked drop in working capital. This is akin to a patient whose blood pressure is dropping — liquidity is the life-blood of day-to-day business operations, and this reduction signals a tightening of available cash or receivables.
  • The fall in net assets from £49,405 to £39,467 within a year hints at either reduced profitability or withdrawals; this is similar to a loss of body mass in a patient, indicating stress or an unhealthy state.
  • The absence of a full profit and loss account limits visibility into revenue trends and profitability, which are crucial to fully assess overall health.

• Contextual Factors:

  • The company is relatively new (incorporated in 2021), and early-stage businesses often experience fluctuating financial metrics as they establish themselves.
  • The director owns 75-100% shares and controls the company, suggesting decisions are centralized, which can be both a strength and a risk depending on strategic choices.

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4. Recommendations: Steps to Improve Financial Wellness

1. Strengthen Liquidity Management:

   • Implement tighter control on receivables collection and cash flow forecasting to prevent cash shortages.
   • Consider negotiating longer payment terms with suppliers to ease current liabilities pressure.

2. Profitability Review and Cost Control:

   • Prepare detailed profit and loss accounts to identify cost drivers and revenue streams more clearly.
   • Evaluate current pricing, project costs, and overheads to improve margins.

3. Capital Structure Monitoring:

   • Avoid excessive withdrawals or drawings that erode net assets; reinvest profits to build equity reserves.
   • Explore options for additional capital or credit facilities if growth requires more working capital.

4. Strategic Planning for Growth:

   • Given the increases in fixed assets, ensure these investments yield returns by securing projects or clients that utilize these assets effectively.
   • Consider diversification within the construction sector or complementary services to stabilize revenue.

5. Governance and Reporting:

   • Maintain timely and transparent financial reporting to support decision-making and potentially attract financing or partnerships.
   • Regularly review financial KPIs against industry benchmarks to detect early symptoms of financial distress.

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Medical Analogy Summary:

NICHOL CONSULTING LTD exhibits a "stable patient" status—its financial "heartbeat" (net assets) remains positive, and its "organ function" (fixed assets) is improving. However, the "circulatory system" (working capital) shows signs of constriction, indicating a need for immediate intervention to avoid future liquidity crises. With attentive management and strategic adjustments, the company can regain robust health and support sustainable growth.

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