NICK BARR CONSULTING LTD

Executive Summary

Nick Barr Consulting Ltd is facing financial challenges marked by negative working capital and equity, relying heavily on director loans with limited operational cash inflow. Immediate actions to improve cash flow, reduce liabilities, and inject capital are critical to stabilize the company’s financial health and support a sustainable recovery.

NICK BARR CONSULTING LTD - Analysis Report

Company Number: 13838967

Analysis Date: 2025-07-19 12:53 UTC

Financial Health Assessment of Nick Barr Consulting Ltd

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1. Financial Health Score: D

Explanation:
Nick Barr Consulting Ltd exhibits several warning signs typical of financial distress. Negative net current assets and shareholders’ funds indicate a liquidity crunch and erosion of equity capital. While the company remains active and directors express confidence in future trade, the current financial "vital signs" suggest a fragile condition that requires immediate attention to avoid worsening outcomes.

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2. Key Vital Signs

Metric	Value (2024)	Interpretation
Current Assets	£2,557	Very low short-term assets, mainly cash.
Cash	£2,557	Cash improved from £266 last year but still minimal.
Debtors	£0	No trade receivables, possibly low sales or delayed invoicing.
Current Liabilities	£18,629	High short-term debt, mostly director loans.
Net Current Assets	-£16,072	Negative working capital; unable to cover short-term debts.
Net Assets (Equity)	-£15,970	Negative equity; liabilities exceed assets.
Shareholders’ Funds	-£16,070	Indicates accumulated losses or heavy borrowing.
Number of Employees	2	Small team size consistent with micro/small entity.

Interpretation:

• Negative net current assets act like a "low pulse" warning, showing insufficient short-term liquidity to meet immediate obligations.
• Negative shareholders’ funds resemble "weak immune system," showing the company’s capital base is eroded, increasing vulnerability.
• The bulk of current liabilities are director loans (£18,629), which may indicate reliance on internal funding, a potential symptom of external financing difficulties.
• The absence of debtors could mean poor sales or delayed revenue recognition, akin to "poor nutrient intake."
• Tangible fixed assets are minimal (£102), showing limited investment in physical resources.
• The directors affirm a going concern basis, suggesting confidence and willingness to support, which is a positive factor ("supportive care").

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3. Diagnosis

Nick Barr Consulting Ltd is currently in a state of financial distress, characterized by negative working capital and negative equity. The company’s liabilities, largely in the form of director loans, outweigh current assets by a significant margin. The business appears to be relying heavily on internal financing rather than generating sufficient operational cash flow.

This financial condition is symptomatic of a "patient" struggling to maintain stability. The lack of trade debtors suggests weak sales activity or delayed cash inflows, which combined with high short-term liabilities, signals liquidity stress. The company has not yet defaulted and remains active, but the current financial "symptoms" warrant close monitoring and intervention.

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4. Recommendations

To improve financial wellness, the company should consider:

1. Enhancing Cash Flow (Improve “Healthy Circulation”):

   • Accelerate invoicing and collections to build debtor balances.
   • Explore new sales channels or increase marketing to boost turnover.

2. Reducing Short-Term Liabilities (Alleviate “Debt Burden”):

   • Negotiate extended repayment terms on director loans or convert some loans into equity to strengthen the balance sheet.
   • Avoid incurring additional short-term debt unless it generates immediate returns.

3. Capital Injection (“Strengthening Immunity”):

   • Consider fresh equity investment from shareholders or external investors to restore positive net assets.
   • Directors may need to increase capital contributions if external funding is not available.

4. Cost Control and Efficiency (“Reducing Metabolic Demand”):

   • Review operating expenses and employee costs to ensure sustainability at current turnover levels.
   • Focus on profitable contracts and discontinue unprofitable activities.

5. Regular Financial Monitoring (“Health Checkups”):

   • Implement monthly cash flow forecasting and management reporting to detect early warning signs.
   • Engage with an accountant or financial advisor for ongoing diagnostic reviews.

6. Strategic Planning (“Long-Term Wellness”):

   • Develop a clear business plan outlining growth targets and financial milestones to guide recovery.

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