NLCS CALIBRATION LTD

Executive Summary

NLCS Calibration Ltd is financially healthy with strong profitability, positive working capital, and a solid equity base for its first year of operation. The company demonstrates effective cost management and liquidity but should monitor goodwill valuation and pursue growth strategies to enhance financial resilience. Overall, the outlook is stable with good potential for sustainable progress.

NLCS CALIBRATION LTD - Analysis Report

Company Number: 14673155

Analysis Date: 2025-07-29 17:39 UTC

Financial Health Assessment of NLCS Calibration Ltd
As at 31 March 2024

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1. Financial Health Score: B

Explanation:
NLCS Calibration Ltd demonstrates a solid start-up phase performance with profitable operations, positive net assets, and healthy working capital. While the business shows no immediate distress symptoms, the relatively modest scale of operations and limited asset base indicate room for growth and resilience improvement. Thus, a "B" grade reflects good financial health with some caution due to the company's young age and scale.

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2. Key Vital Signs:

Metric	Value	Interpretation
Turnover	£118,587	Modest revenue for a first full financial year reflecting small scale operation.
Gross Profit Margin	82.9%	(Gross profit £98,285 / Turnover) Indicates efficient cost control on sales.
Operating Profit Margin	29.0%	Healthy margin suggesting strong operational efficiency.
Profit for the Year	£26,727	Positive net profit indicates a profitable business model.
Net Current Assets (Working Capital)	£10,687	Positive working capital signals liquidity to meet short-term obligations.
Cash Reserves	£30,262	Adequate cash buffer provides a healthy liquidity cushion.
Current Liabilities	£45,840	Manageable short-term debts relative to assets and cash.
Net Assets (Equity)	£24,827	Positive equity base indicates the company is solvent.
Intangible Assets (Goodwill)	£10,800	Significant goodwill relative to size; must monitor for impairment risks.
Number of Employees	2	Reflects a micro/small business scale.

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3. Diagnosis:

Symptoms Analysis:

• The company exhibits "healthy cash flow" with cash and debtors exceeding immediate liabilities, a positive sign similar to a patient with stable vital signs.
• Profitability margins are strong, showing the business is "nutritionally sound" from an operational perspective—costs are well-managed relative to income.
• Positive net assets and working capital indicate the company is "financially solvent" and not under immediate liquidity stress, akin to good blood pressure in a patient.
• The presence of goodwill as a significant intangible asset (around 43% of total assets) requires careful monitoring; goodwill can be a source of "latent risk" if future earnings do not justify its value.
• The company is newly incorporated (2023) and thus at an early stage of its lifecycle; typical "young patients" may experience growing pains but currently show no signs of distress.
• Tax liabilities and other creditors are reasonable given turnover and profit levels.
• The small team size and limited fixed assets are typical for a specialist service business but may limit scalability unless addressed.

Overall Financial Condition:
The company is in a stable and profitable condition, demonstrating capability to cover debts and generate surplus. The financial position is consistent with a small, efficiently run enterprise at an early stage. There are no alarming symptoms such as negative equity, cash flow deficits, or high leverage.

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4. Recommendations:

To further improve financial wellness and strengthen resilience, the following actions are advised:

• Monitor Goodwill Impairment: Regularly review the recoverability of goodwill to avoid "hidden illness" on the balance sheet. Consider stress testing future cash flows supporting this asset.
• Enhance Liquidity Buffers: While current liquidity is healthy, building larger cash reserves or access to credit lines can provide a "safety net" for unexpected downturns or investment opportunities.
• Scale Revenue Streams: Explore strategic growth initiatives to increase turnover, which will dilute fixed costs and improve margins further—akin to building muscle strength for greater endurance.
• Control Creditors and Payables: Maintain disciplined management of creditor terms to preserve working capital health, ensuring the company avoids liquidity crunches.
• Invest in Staff and Technology: Consider gradual expansion of the team or technology assets to boost capacity and operational efficiency, preparing for growth phases.
• Regular Financial Health Check-ups: Schedule periodic reviews of key financial metrics and cash flow forecasts to detect early signs of distress and act proactively.

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