ON POINT TRAFFIC MANAGEMENT LTD

Executive Summary

ON POINT TRAFFIC MANAGEMENT LTD is exhibiting critical financial symptoms including negative working capital and insolvency on the balance sheet, indicating poor financial health and liquidity distress. Immediate actions in cash flow management, capital injection, and cost control are essential to stabilize the company and avoid insolvency risks. With prompt intervention and improved financial oversight, the company can potentially recover its financial wellness.

ON POINT TRAFFIC MANAGEMENT LTD - Analysis Report

Company Number: 13148262

Analysis Date: 2025-07-19 13:05 UTC

Financial Health Assessment Report for ON POINT TRAFFIC MANAGEMENT LTD

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1. Financial Health Score: D (Poor)

Explanation:
The company shows significant financial distress symptoms, particularly negative net current assets and net liabilities, which indicates poor liquidity and solvency positions. The micro-entity size limits detailed disclosures, yet the available data reveals financial strain that requires urgent management attention.

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2. Key Vital Signs

Metric	2024 Value (£)	Interpretation
Fixed Assets	1,499	Minimal investment in long-term assets, typical for micro businesses.
Current Assets	3,593	Low current resources available to meet short-term obligations.
Current Liabilities	9,543	High short-term debts relative to current assets, a worrying sign.
Net Current Assets	-5,950	Negative working capital indicates inability to cover immediate debts.
Total Assets Less Current Liabilities	-4,451	Overall asset base insufficient to cover current liabilities, a sign of distress.
Creditors due after one year	500	Some longer-term liabilities present.
Net Assets (Shareholders Funds)	-4,951	Negative equity; company owes more than it owns.
Average Number of Employees	1	Very small operational scale.

• Liquidity (Current Ratio) = Current Assets / Current Liabilities = 3,593 / 9,543 ≈ 0.38 (Ideal ≥ 1)
  Symptom: Severely poor liquidity; company struggles to meet short-term debts.

• Solvency (Net Assets) = Negative (-4,951)
  Symptom: Insolvent on balance sheet; liabilities exceed assets.

• Working Capital = Negative (-5,950)
  Symptom: Insufficient short-term resources — a critical red flag.

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3. Diagnosis: Financial Condition and Underlying Health

The financial “vital signs” indicate that ON POINT TRAFFIC MANAGEMENT LTD is currently in a state of serious financial distress. The negative net current assets and net overall liabilities suggest the company is operating with a cash flow deficit and is unable to meet its immediate financial obligations without external support.

The negative shareholders’ funds signal insolvency on the balance sheet, which is a critical symptom of financial sickness that can lead to formal insolvency proceedings if not addressed promptly. The company’s small operational scale (one employee) and micro-entity status limit its ability to absorb financial shocks.

Given the company operates in the construction of roads and motorways (SIC 42110), which typically involves upfront costs and delayed payments, the liquidity crunch could be due to timing mismatches between receivables and payables or undercapitalisation.

The director is also the sole shareholder and has full control, which means decisions to improve financial health rest fully with him. However, the director’s occupation as a labourer may indicate limited financial management expertise, which could be contributing to the current financial symptoms.

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4. Prognosis: Future Financial Outlook

Without intervention, the prognosis is poor. Continued negative working capital and insolvency increase the risk of insolvency proceedings such as liquidation or administration. However, as a micro company, it may be able to negotiate with creditors or restructure debts informally if the director can secure additional funding or improve cash management.

The company’s survival depends on improving liquidity—through better cash flow management, cost control, or capital injection—and stabilizing its balance sheet. Failure to do so will likely result in worsening financial distress.

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5. Recommendations: Steps to Improve Financial Wellness

• Immediate Cash Flow Management:
  Conduct a detailed cash flow forecast to identify timing of cash inflows and outflows. Prioritize payments and negotiate extended terms with creditors if possible.

• Capital Injection:
  Consider injecting additional equity or obtaining a loan to shore up working capital and improve liquidity.

• Cost Control:
  Review and reduce overheads and discretionary expenses to conserve cash.

• Financial Expertise:
  Engage an accountant or financial advisor with experience in small construction businesses to improve financial planning and reporting.

• Creditors Negotiation:
  Approach creditors proactively to explain the situation and seek restructuring or payment plans to avoid legal actions.

• Monitor Financial Metrics:
  Regularly track liquidity ratios, working capital, and net assets to detect early signs of improvement or further distress.

• Business Strategy Review:
  Evaluate pricing, contract terms, and project management to improve profitability and cash generation.

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Executive Summary