OPTIMAL INVENTORIES LIMITED

Executive Summary

Optimal Inventories Limited shows typical characteristics of a newly established micro-entity with a fragile but stable financial position. While the company maintains positive working capital and liquidity, the very low net assets highlight a vulnerability to cash flow shocks. Proactive cash flow management and strengthening the equity base are essential steps to improve financial wellness and secure sustainable growth.

OPTIMAL INVENTORIES LIMITED - Analysis Report

Company Number: 14863536

Analysis Date: 2025-07-20 17:38 UTC

Financial Health Assessment – OPTIMAL INVENTORIES LIMITED

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1. Financial Health Score: C

Explanation:
The company exhibits a basic but fragile financial position typical of a newly incorporated micro-entity. There are early signs of operational activity with positive net current assets, but the very low net asset base and minimal fixed assets suggest limited financial cushioning. The score reflects a "stable but vulnerable" condition — the business is not in immediate distress but requires close monitoring and active management to strengthen its financial foundation.

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2. Key Vital Signs

Metric	Value (£)	Interpretation
Fixed Assets	1,251	Minimal investment in long-term assets. Indicates early-stage business or asset-light model.
Current Assets	26,404	Represents cash or assets convertible to cash within a year. Healthy for day-to-day liquidity.
Current Liabilities	25,980	Short-term obligations nearly equal current assets, leaving a narrow margin for working capital.
Net Current Assets	424	Positive but very small working capital "cushion," indicating limited buffer for unforeseen expenses.
Accruals and Deferred Income	1,346	Represents income received but not yet earned or expenses accrued, reducing net assets.
Net Assets (Shareholders’ Funds)	329	Very low equity base, indicating the company is just starting out with limited retained profits or capital injection.
Average Number of Employees	2	Small workforce consistent with a micro-entity category.

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3. Diagnosis

Symptoms Analysis:

• The company’s financial "vital signs" suggest it is in the incubation phase, with limited operational history (incorporated May 2023).
• The positive but very narrow net current assets indicate a fragile liquidity position; the business has "healthy cash flow" for now but little margin for error or unexpected costs.
• The very low net assets signal that the company has little capital buffer to absorb losses or invest in growth without additional funding.
• The accruals and deferred income reduce net assets further, hinting at timing differences in revenue recognition or pending obligations.
• The directors’ dual roles and control indicate hands-on management, which is typical for small private companies.
• Being categorized as a micro-entity means simplified reporting but also limited financial scale.

Overall Condition:
Optimal Inventories Limited is in a delicate yet stable financial state typical of early-stage companies. The "symptoms" do not currently indicate distress or insolvency risk, but the narrow working capital and low equity imply vulnerability to cash flow shocks or operational setbacks.

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4. Recommendations

• Strengthen Working Capital: Aim to increase net current assets by better managing receivables, payables, and inventory turnover. A stronger working capital "buffer" will help absorb operational fluctuations.
• Build Equity Base: Consider capital injections or reinvesting any profits to raise net assets and improve financial resilience. This will create a healthier balance sheet to support future growth.
• Monitor Cash Flow Vigilantly: Maintain strict control over cash inflows and outflows to avoid liquidity "symptoms" such as late payments or overdrafts.
• Plan for Asset Investment: As the business grows, plan for investment in fixed assets or technology to support expansion and operational efficiency.
• Regular Financial Review: Conduct quarterly reviews of financial metrics to detect early signs of distress and adapt strategies promptly.
• Maintain Compliance: Keep up to date with filing deadlines and regulatory requirements to avoid penalties and reputational risk.

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