NXT SKILLS LTD

Executive Summary

NXT SKILLS LTD demonstrates solid financial health with a strong net asset position and positive working capital, reflecting effective management and growth over recent years. While the company is financially stable and expanding operationally, attention to capital structure and liability management will be key to sustaining long-term wellness. With prudent financial planning, the company is well-positioned to continue its upward trajectory.

NXT SKILLS LTD - Analysis Report

Company Number: 13038106

Analysis Date: 2025-07-20 13:38 UTC

Financial Health Assessment of NXT SKILLS LTD

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1. Financial Health Score: B

Explanation:
NXT SKILLS LTD exhibits solid fundamentals typical of a growing micro-entity. The company maintains a healthy net asset base that has more than doubled over two years, supported by increasing fixed and current assets. Working capital is robust, indicating good short-term liquidity. However, as a micro-entity with relatively modest share capital and increasing liabilities, there is room for strengthening financial resilience as the business scales. The score "B" reflects generally sound financial health with some caution advised.

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2. Key Vital Signs

Metric	2023 Figure	Interpretation
Fixed Assets	£23,823	Increased asset base signals investment in long-term resources, supporting operational capability.
Current Assets	£70,757	Healthy cash, receivables, or stock levels available to cover short-term needs.
Current Liabilities	£33,920	Short-term debts or obligations that are manageable given the current assets.
Net Current Assets	£36,837	Positive working capital, indicating the company can comfortably meet its short-term obligations.
Total Net Assets	£58,616	Strong equity position for a micro company, reflecting accumulated retained earnings and capital.
Share Capital	£2.00	Nominal share capital typical of micro entities; most value lies in reserves and retained profits.
Average Employees	7 (up from 4)	Growth in headcount suggests business expansion and increased operational activity.

Vital Sign Summary:
The company shows "healthy cash flow" (positive net current assets) and "strong body mass" (net assets growth) indicative of good financial health. The increase in fixed assets and employees aligns with business development and scaling.

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3. Diagnosis

• Liquidity and Solvency:
  The company’s liquidity is sound as evidenced by net current assets nearly doubling to £36,837, meaning it has sufficient short-term resources to cover liabilities. Long-term creditors have decreased, reducing financial stress.

• Growth and Investment:
  Fixed assets have increased by 79% (£13,266 to £23,823), signaling investment in infrastructure or equipment, which is a positive symptom of growth orientation. The rise in current assets alongside liabilities suggests active trading and expansion.

• Capital Structure:
  While share capital is minimal (£2), retained earnings and reserves have built equity value, showing profitability over time. The balance sheet strength is good for a micro company, but reliance on reserves rather than equity injections is typical at this stage.

• Operational Health:
  The average number of employees increased from 4 to 7, demonstrating business scaling and potentially higher revenue generation capacity.

• Risks and Concerns:
  No overdue filings or signs of financial distress were noted. However, increasing liabilities warrant monitoring to ensure they do not outpace asset growth. The company operates in a niche social work activity sector, which may have variable revenue streams.

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4. Recommendations

1. Maintain Cash Reserves and Monitor Working Capital:
   Continue to nurture strong liquidity to avoid symptoms of cash flow strain. Regular cash flow forecasting is advised to anticipate and mitigate any short-term liquidity stress.

2. Strategic Capital Planning:
   Consider increasing share capital or attracting external investment to widen the equity base. This will strengthen the financial "immune system" against unexpected downturns and support future growth.

3. Manage Liabilities Prudently:
   Keep a close eye on creditor terms and negotiate favorable payment conditions to maintain healthy net current assets. Avoid over-leveraging to prevent financial distress symptoms.

4. Operational Efficiency:
   As employee numbers rise, ensure that productivity and revenue growth keep pace with increased overheads, maintaining a balanced financial metabolism.

5. Prepare for Scaling Challenges:
   Develop a financial strategy that supports sustainable growth, including budgeting for capital expenditure, reserves, and potential market fluctuations typical in social work services.

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