NMS MANAGEMENT SOLUTIONS LTD

Executive Summary

NMS Management Solutions Ltd maintains strong liquidity and no immediate financial distress but shows mild symptoms of profitability challenges. Strategic focus on cost control, profitability enhancement, and cautious dividend policy is recommended to ensure sustainable financial health.

NMS MANAGEMENT SOLUTIONS LTD - Analysis Report

Company Number: 12600350

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

Financial Health Assessment for NMS MANAGEMENT SOLUTIONS LTD

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1. Financial Health Score: B

Explanation:
NMS Management Solutions Ltd shows a stable financial footing with positive net current assets and shareholders' funds, indicating a healthy liquidity position and capital base for a small IT consultancy. However, the company experienced a small operating deficit in the latest year and dividend payments have slightly reduced retained earnings, which suggests some mild symptoms of financial stress. Overall, the company maintains a sound financial condition but should monitor profitability to strengthen resilience.

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2. Key Vital Signs

Metric	Latest Year (2024)	Interpretation
Current Assets	£10,269	Cash and receivables remain positive, supporting day-to-day operations.
Cash at Bank	£9,021	Healthy cash reserves relative to size, indicating good immediate liquidity ("healthy cash flow").
Current Liabilities	£0	No short-term debts, a positive sign reflecting low financial stress in meeting obligations.
Net Current Assets	£10,269	Positive working capital, indicating the company can cover short-term liabilities comfortably.
Shareholders’ Funds	£10,269	Equity capital is positive but lower compared to prior years; reflects ongoing business value.
Retained Earnings	£10,169	Accumulated profits have decreased due to operating losses and dividends, a symptom of caution.
Profit/Loss Trend	£779 deficit (2024)	A mild operating loss indicating underlying profitability issues ("symptom of distress").
Dividend Payments	£500 paid in 2024	Outflows to owners reduce retained earnings, which must be balanced against reinvestment needs.

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3. Diagnosis

• Liquidity & Solvency:
  The company has strong liquidity, with cash nearly covering all current liabilities (which are zero). The absence of short-term debt is a positive "vital sign" indicating no immediate financial distress.

• Profitability:
  The latest financial year resulted in a modest loss of £779, a "symptom" that suggests operational challenges or increased costs. This contrasts with prior years where the company maintained modest profits. Dividend payments during a loss-making year could strain reserves if continued long-term.

• Capital Structure:
  Shareholders’ funds have decreased from £16,098 in 2020 to £10,269 in 2024, mainly due to dividends and a recent deficit. This reduction signals a need for cautious management of equity and reinvestment to maintain financial robustness.

• Business Context:
  As an Information Technology consultancy (SIC 62020), the company operates in a competitive and dynamic sector, where maintaining profitability and cash flow is vital to sustain business operations and growth.

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4. Recommendations

• Improve Profitability:
  Review cost structures and pricing strategies to reverse the recent deficit trend. Consider focusing on higher-margin projects or services to boost net income.

• Dividends Policy Review:
  Suspend or reduce dividend payments during loss periods to conserve capital and support financial stability ("resting the patient" financially).

• Cash Flow Monitoring:
  Continue to maintain strong liquidity and monitor receivables closely to avoid cash flow "symptoms" such as delayed payments or increased debtor days.

• Strategic Growth Planning:
  Explore opportunities to expand client base or service offerings to increase turnover without significantly increasing fixed costs.

• Financial Reporting:
  Consider preparing and reviewing detailed management accounts periodically to detect early signs of financial stress and make timely decisions.

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Executive Summary

NMS Management Solutions Ltd is financially stable with strong liquidity and no short-term liabilities, suggesting a healthy cash flow position. However, recent operating losses combined with dividend payments have reduced retained earnings, indicating mild financial strain. Focusing on improving profitability and prudent dividend management will bolster long-term financial wellness.