ONIMA MEDIA LTD

Executive Summary

ONIMA MEDIA LTD shows a promising financial position for a young company, with positive net assets and working capital indicating operational viability. The primary challenge lies in managing liquidity due to a high debtor balance and modest cash reserves. With improved cash flow management and careful monitoring, the company is well-positioned for sustainable growth in the sound recording and video distribution sector.

ONIMA MEDIA LTD - Analysis Report

Company Number: 13267080

Analysis Date: 2025-07-20 17:49 UTC

Financial Health Assessment Report for ONIMA MEDIA LTD (as at 31 March 2023)

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1. Financial Health Score: B

Explanation:
ONIMA MEDIA LTD demonstrates a solid start-up phase with positive net assets and working capital. The company has built a reasonable asset base within a short time since incorporation in 2021, reflected by net assets of £82,741. While liquidity is somewhat constrained due to relatively low cash reserves compared to current liabilities, the healthy debtor book supports ongoing operations. The financial position is stable but with some caution warranted around cash flow management. Overall, the company’s financial health is good but not yet robust enough for an A grade due to cash flow caution.

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2. Key Vital Signs

Metric	Value (£)	Interpretation
Net Assets (Shareholders’ Funds)	82,741	Positive equity indicates company solvency.
Current Assets	243,594	Good short-term asset base mainly driven by debtors.
Current Liabilities	160,853	Obligations due within one year; manageable but significant.
Net Current Assets (Working Capital)	82,741	Positive working capital signals ability to cover short-term debts.
Cash at Bank	23,854	Cash buffer is modest; potential liquidity risk.
Debtors (Trade + Other)	219,740	Large receivables—indicates sales but may pose collection risk.
Share Capital	1	Nominal capital; typical for start-up.
Profit and Loss Reserve	82,740 (accumulated profit)	Indicates retained earnings and growth since inception.

Interpretation of Vital Signs:

• The company has a positive and growing equity base, showing it has generated value since starting operations in April 2022.
• The majority of current assets are debtors, meaning cash is tied up in amounts owed to the company, which requires effective collection to maintain liquidity.
• While working capital is positive, the modest cash balance relative to current liabilities suggests the company should monitor its cash flow closely to avoid liquidity squeeze.
• Creditors are dominated by trade creditors, corporation tax, and accruals, indicating normal operational liabilities and tax obligations.

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3. Diagnosis: Financial "Health" of ONIMA MEDIA LTD

• Healthy Signs (Vital Organ Functioning Well):
  The company’s balance sheet shows a positive net asset position and working capital. This is akin to a patient whose vital signs (blood pressure, heart rate) are stable. The business has generated profits retained in reserves, indicating operational viability and growth potential in the early years. The presence of debtors confirms active trading and revenue generation.

• Symptoms of Potential Distress:
  The relatively low cash reserve compared to current liabilities is a symptom of liquidity stress risk. It suggests that while the company has earned revenues (debtors), it may not yet have fully converted these into cash, potentially causing short-term cash flow challenges. This is like a patient with stable vital signs but low hydration levels—needs attention to prevent deterioration.

• Underlying Condition:
  The company's financial structure is typical of a young SME in the creative/media sector, where revenues may be invoiced but cash collection cycles can delay liquidity. The director’s loan to the company (£7,071) shows internal funding support, indicating reliance on related party financing, which is common in early-stage firms.

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4. Prognosis: Future Financial Outlook

• Positive Outlook:
  If the company maintains its debtor collection efficiency and controls creditor payments, the positive working capital and accumulated profits bode well for sustainable growth. The business is in a good position to invest and expand given its current financial base.

• Risks to Monitor:
  Cash flow management will be critical. Any delays in receivables collection or unexpected liabilities could strain liquidity. The company should ensure timely invoicing, follow-up on receivables, and maintain cost discipline.

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5. Recommendations: Actions to Improve Financial Wellness

1. Enhance Cash Flow Management:

   • Implement strict credit control to reduce debtor days and improve cash conversion.
   • Consider invoice factoring or short-term financing if needed to ease liquidity pressure.

2. Build Cash Reserves:

   • Aim to increase cash at bank to cover at least 1-2 months of operating expenses to safeguard against cash flow shocks.

3. Monitor and Manage Creditors:

   • Negotiate payment terms with suppliers to optimize cash outflows without damaging supplier relationships.

4. Regular Financial Review:

   • Conduct monthly cash flow forecasts to anticipate and mitigate liquidity risks early.
   • Track key performance indicators (KPIs) like debtor turnover and current ratio.

5. Leverage Director Support:

   • The director’s loan is useful but should be managed prudently to avoid over-reliance on related party funding.

6. Prepare for Growth:

   • As the company grows, consider increasing share capital or seeking external investment to strengthen the balance sheet.

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