Company Number: SC740251

Analysis Date: 2025-07-29 17:15 UTC

Financial Health Assessment Report for Oushk Pharmacy Ltd

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1. Financial Health Score: B+

Explanation:
Oushk Pharmacy Ltd exhibits strong liquidity and solid net asset growth within a short operational period since incorporation in 2022. The company has a healthy working capital position and increasing shareholder funds, indicating good financial stability. However, the reliance on related-party royalty payments and concentration of control suggests caution in governance and operational independence. Overall, the company shows promising vitality with manageable risks.

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2. Key Vital Signs

Metric	31-Mar-2025	31-Aug-2024	Interpretation
Current Assets	£1,759,737	£246,069	Significant growth, indicating improved liquidity position.
Cash at Bank	£415,459	£17,831	Healthy cash reserves, a sign of strong cash flow management.
Debtors	£1,244,278	£228,238	Large increase; potential risk if receivables are slow to collect.
Current Liabilities	£915,529	£125,662	Increased liabilities, but still covered by current assets.
Net Current Assets (Working Capital)	£844,208	£120,407	Positive and growing, indicating operational liquidity.
Net Assets (Equity)	£850,386	£124,925	Strong growth in equity, reflecting retained earnings and capital injection.
Inventories	£100,000	£0	Introduction of stock, appropriate for a pharmacy business.
Shareholders' Funds	£850,386	£124,925	Consistent with net assets, showing financial solidity.
Average Number of Employees	3	1	Business scaling up, which may increase operating costs.

Additional Notes:

• The company benefits from a positive net working capital, which means it has more short-term assets than short-term liabilities—indicating "healthy cash flow" capacity in the short term.
• Tangible fixed assets increased slightly but remain a small proportion of total assets, which is typical in a service/dispensing business.
• The large increase in debtors suggests either rapid sales growth or extended credit terms, which could be a "symptom of cash flow stress" if not managed carefully.
• The company pays significant royalty fees to its parent company, Oushk Ltd (£423,022 in the latest year), which impacts profitability and cash reserves.

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3. Diagnosis

Financial Condition:
Oushk Pharmacy Ltd is in a financially sound condition with robust asset growth and strong equity base for a relatively young company. The working capital is comfortably positive, indicating the business can meet its short-term obligations without distress. The sizeable increase in debtors and current liabilities is a symptom of rapid business scaling, possibly reflecting increased sales and operational activity.

Risk Factors:

• The large debtors balance signals a need for effective credit control to avoid liquidity crunches.
• Royalty payments to the parent company, which constitute a material cost, could impact profitability and cash flow if sales do not continue to grow.
• The company is heavily controlled by Oushk Ltd and a key individual, which concentrates decision-making risk.

Operational Outlook:
The increase in employees and inventory suggests the company is expanding its capacity to serve customers, which is positive for future revenues but requires careful management to avoid overextension.

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4. Recommendations

1. Improve Debtors Management:
   Implement stricter credit control policies and regular monitoring to ensure timely collection of receivables, minimizing the risk of cash flow interruption.

2. Review Related-Party Transactions:
   Assess the commercial terms of royalty payments to Oushk Ltd to ensure they are sustainable and do not excessively drain profitability.

3. Strengthen Governance:
   Consider broadening the board or introducing independent oversight to mitigate risks from concentrated control and improve strategic decisions.

4. Monitor Liquidity Metrics Regularly:
   Keep a close watch on cash flow forecasts and working capital ratios, especially as the business scales, to avoid symptoms of financial distress.

5. Inventory Management:
   Optimize inventory levels to balance meeting customer demand without tying up excessive capital in stock.

6. Plan for Profitability:
   While current assets and equity are strong, focus on converting sales growth into sustainable operating profits.

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