NICK TREW AND ASSOCIATES LIMITED

Executive Summary

Nick Trew and Associates Limited remains solvent but shows signs of financial strain, particularly with a sharp decline in cash reserves and increased reliance on unsecured director loans. Immediate focus on improving cash flow, managing costs, and formalising internal funding arrangements is essential to stabilise and improve financial health going forward.

NICK TREW AND ASSOCIATES LIMITED - Analysis Report

Company Number: 12604665

Analysis Date: 2025-07-29 14:52 UTC

Financial Health Assessment: NICK TREW AND ASSOCIATES LIMITED

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1. Financial Health Score: C

Explanation:
The company shows evidence of basic financial stability but also displays warning signs that suggest caution. While the business maintains positive net current assets and net assets, there has been a significant decline in cash reserves and net asset value in the latest year. This indicates some financial strain or changes in funding structure. The score "C" reflects a company that is currently solvent but showing symptoms of financial stress that require attention to avoid deterioration.

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2. Key Vital Signs (Core Financial Metrics & Interpretation)

Metric	2024 Value (£)	Interpretation
Cash at Bank	1,153	Very low cash reserves, down sharply from £24,666 in 2023 — a symptom of liquidity stress.
Debtors	13,706	Increased substantially from zero in 2023, reflecting loans to director rather than trade receivables.
Current Liabilities	13,644	High relative to cash, close to current assets, tight working capital.
Net Current Assets	1,215	Positive but sharply reduced from £9,746 in 2023, indicating reduced short-term buffer.
Net Assets (Shareholders’ Funds)	1,215	Positive but significantly down from £9,746, signs of asset impairment or distribution of funds.
Director’s Loan Account (Debtors)	13,706	Substantial loan to director, unsecured and repayable on demand, creating dependency on director funding.
Profit & Loss Reserve	1,115	Reduced from £9,646, indicating retained earnings have declined sharply.

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3. Diagnosis (What the Financial Data Reveals)

Healthy Signs:

• The company remains solvent with positive net assets and net current assets.
• No overdue filings or administrative issues, indicating good compliance and governance discipline.
• Ongoing director involvement and control, with clear ownership transparency.

Symptoms of Financial Distress:

• Cash reserves have dropped dramatically (from £24,666 to £1,153), which is akin to a patient’s bloodstream losing volume — a critical liquidity warning.
• The significant increase in director’s loan account indicates reliance on internal funding rather than external cash flow or operating income. This is a symptom of strained operational cash flow or funding gaps.
• Net current assets have plummeted, reducing the company’s ability to meet short-term obligations comfortably.
• The decline in retained earnings (Profit & Loss Reserve) points to either losses or distributions that have eroded the company’s financial cushion.
• The balance sheet shows no fixed assets or long-term investments, indicating no tangible safety net or capital base beyond working capital.

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4. Prognosis (Future Financial Outlook)

• Without intervention, the company risks further liquidity constraints, potentially leading to difficulties in meeting creditor demands or operational funding.
• The director’s loan account, while providing a temporary lifeline, is a double-edged sword: it increases financial risk if the director demands repayment or if the company cannot generate independent cash flow.
• The company’s ability to sustain operations depends heavily on improving cash flow from trading or securing alternative financing.
• If cash inflows improve, and the director’s loan is either repaid or converted to equity, the company’s financial health could stabilize or improve.
• Continued monitoring of cash flow and strict cost management are critical to avoid a future "illness" (insolvency).

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5. Recommendations (Specific Actions to Improve Financial Wellness)

1. Improve Cash Flow Management:

   • Implement tighter controls on receivables and payables to preserve liquidity.
   • Seek to convert director’s loan into equity or formalise repayment terms to reduce balance sheet risk.

2. Explore Revenue Enhancement:

   • Focus on securing new contracts or clients, given the management consultancy SIC code, to generate consistent operating income.

3. Cost Rationalisation:

   • Review overheads and discretionary spending to conserve cash and increase operational efficiencies.

4. Financial Planning and Forecasting:

   • Develop detailed cash flow forecasts to anticipate funding needs and avoid liquidity crises.
   • Engage with financial advisors or accountants for budgeting and tax planning, considering corporation tax liabilities have increased.

5. Strengthen Capital Structure:

   • Consider external funding options such as small business loans or equity injections if appropriate to reduce reliance on director loans.

6. Regular Financial Health Reviews:

   • Conduct quarterly financial health check-ups to monitor key indicators and act promptly on adverse trends.

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Medical Analogy Summary

NICK TREW AND ASSOCIATES LIMITED is currently "breathing" but with weakened "circulation" (cash flow). The company’s "vital signs" show it is surviving but under stress, relying on "internal blood transfusions" (director’s loans) to keep functioning. Without lifestyle changes (cash flow improvement and cost control), it risks moving from a manageable condition to a critical state.

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