PCOMMANDO LTD

Executive Summary

PCommando Ltd shows symptoms of financial strain, with negative working capital and very low equity posing liquidity risks. Immediate management focus on cash flow improvement and capital strengthening is essential to stabilise the company's financial health and support sustainable operations.

PCOMMANDO LTD - Analysis Report

Company Number: SC721782

Analysis Date: 2025-07-20 17:34 UTC

Financial Health Assessment Report for PCommando Ltd (as of 31 March 2024)

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1. Financial Health Score: D

Explanation:
PCommando Ltd exhibits symptoms of financial distress primarily due to persistent negative working capital and minimal shareholders’ funds. While the company is solvent on a technical basis (total assets marginally exceed current liabilities), the negative net current assets and limited equity cushion suggest vulnerability to short-term liquidity pressures and operational risks.

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2. Key Vital Signs

Metric	2024 Value	Interpretation
Shareholders’ Funds	£70	Extremely low equity base, signaling thin financial buffer for absorbing losses or shocks.
Net Current Assets (Working Capital)	-£12,405	Negative working capital indicates current liabilities exceed current assets, a liquidity concern.
Current Assets	£43,213	Includes stock (£30,500), debtors (£7,745), and cash (£4,968). Stock concentration may affect liquidity.
Current Liabilities	£55,618	High short-term obligations relative to liquid assets, exerting pressure on cash flow health.
Fixed Assets	£12,475	Small but stable base of fixed assets including goodwill and tangible assets.
Cash on Hand	£4,968	Limited cash reserves to meet immediate obligations.
Debtors	£7,745	Moderate trade receivables; their collectability impacts cash flow.
Amortisation of Goodwill	£1,200/year	Ongoing amortisation expense reduces profitability but is non-cash.
Employee Count	2 employees	Very small size, implying limited operational scale and potentially high reliance on key individuals.

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3. Diagnosis: Financial Condition Overview

PCommando Ltd is a young, micro-sized private limited company with a business focus in specialized sales agency activities. The company has yet to build a substantial equity base, with shareholders' funds shrinking from £202 in 2023 to £70 in 2024. This thin capital base is a red flag indicating limited capacity to absorb operational shocks or losses.

The most pressing symptom is the persistent negative working capital, where current liabilities exceed current assets by over £12,000. This "liquidity deficit" signals a potential cash flow crunch, meaning the company may struggle to pay its short-term debts as they fall due without additional financing or improved cash collection. The relatively low cash balance exacerbates this risk.

The current asset composition is heavily weighted toward stock, which may not be quickly convertible to cash, especially if market conditions tighten or demand slows. Debtors and cash together form less than half of current assets, further stressing liquidity.

Fixed assets are modest and include goodwill being amortised over ten years, indicating some investment in intangible value, but this is not immediately liquid or a source of cash.

Overall, these symptoms resemble a patient with underlying cardiovascular strain: the company is "breathing," but the heart (cash flow) is weak and struggling to meet demands, requiring urgent intervention to avoid serious financial distress.

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4. Recommendations: Steps to Improve Financial Wellness

• Improve Working Capital Management:

  • Accelerate debtor collections by tightening credit terms and improving follow-up processes to convert receivables into cash faster.
  • Review inventory levels and turnover to reduce stock holding and free up cash tied in slow-moving stock.

• Strengthen Cash Reserves:

  • Consider short-term financing options such as overdrafts or invoice factoring to enhance liquidity during cash flow gaps.
  • Monitor cash flow projections regularly to anticipate and mitigate shortfalls.

• Increase Equity Base:

  • Inject additional capital from shareholders or external investors to bolster the financial buffer and reduce reliance on short-term creditors.
  • Alternatively, retain earnings by improving profitability if feasible.

• Cost Control and Profitability:

  • Review operating expenses and overheads critically to reduce burn rate, given the small employee base and limited resources.

• Risk Monitoring:

  • Implement financial KPIs and early warning indicators to detect worsening liquidity or solvency issues promptly.

• Governance and Planning:

  • Given the company’s small size and sole controlling shareholder, formalise financial planning and risk management to enhance decision-making and transparency.

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Executive Summary

PCommando Ltd is currently in a fragile financial state, primarily due to negative working capital and minimal equity. The company faces liquidity pressure akin to a patient with compromised vital signs, requiring immediate actions focused on improving cash flow and strengthening the capital base to ensure long-term survival and growth.