PDHK NETWORKS LTD

Executive Summary

PDHK Networks Ltd maintains a stable but cautious financial position, with positive net assets and working capital but signs of reducing liquidity and equity. The company should prioritize cash flow management and closely monitor its short-term financial buffers to maintain operational health and enable sustainable growth.

PDHK NETWORKS LTD - Analysis Report

Company Number: 14334645

Analysis Date: 2025-07-20 16:29 UTC

Financial Health Assessment for PDHK NETWORKS LTD (As at 31 March 2024)

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1. Financial Health Score: C

Explanation:
PDHK Networks Ltd exhibits moderate financial health typical of a micro-entity in its early years of operation. The company maintains positive net assets and working capital but shows signs of shrinking liquidity and reduced buffer against short-term obligations compared to the previous year. While no immediate distress symptoms appear, there are cautionary indicators that warrant close management attention.

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2. Key Vital Signs

Metric	31-Mar-2024	31-Mar-2023	Interpretation
Fixed Assets	£8,601	£3,602	Slight increase indicating investment in long-term resources.
Current Assets	£21,707	£40,661	Significant decrease, may indicate cash outflow or reduced receivables.
Current Liabilities	£9,834	£18,583	Decreased short-term debts, a positive sign for liquidity management.
Net Current Assets (Working Capital)	£11,873	£22,078	Positive but nearly halved, reducing the safety margin for operational liquidity.
Accruals and Deferred Income	£2,260	£1,130	Increased liabilities not yet due, could signal timing issues in revenue recognition or expenses.
Net Assets (Shareholders’ Funds)	£18,214	£24,550	Decline in equity capital; suggests retained earnings or capital injections have diminished.
Average Employees	2	2	Stable workforce size, consistent with micro company profile.

Vital Sign Interpretation:

• Healthy cash flow is suggested by positive net current assets, indicating the company can cover short-term liabilities with current assets.
• The symptom of distress is the reduction in current assets and equity, which suggests the company might be consuming cash reserves or facing operational challenges.
• The increase in fixed assets is a sign of investment, but should be balanced against liquidity needs.
• Increased accruals point to possible timing mismatches in cash flows that require monitoring.

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3. Diagnosis

PDHK Networks Ltd, a micro private limited company operating in wireless and wired telecommunications, appears financially stable but with emerging vulnerabilities. Its net assets remain positive, indicating solvency, and the company is not overdue with filings, showing good compliance and governance.

However, the nearly 50% reduction in current assets year-on-year combined with a decrease in net assets suggests the company may be experiencing tightening liquidity or using reserves to fund operations or investments. The working capital remains positive, which is a crucial "vital sign" for short-term health, but the shrinking buffer could become a risk if the trend continues.

The company's small size and limited employee base mean that it is likely sensitive to cash flow fluctuations and external economic factors. Directors should view these signs as early symptoms requiring proactive financial management.

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4. Recommendations

• Enhance Cash Flow Management: Focus on accelerating receivables collection and managing payables to improve liquidity. Consider preparing cash flow forecasts to anticipate short-term funding needs.
• Monitor Working Capital Closely: Keep a vigilant eye on current assets and liabilities trends to avoid cash shortfalls that could constrain operations.
• Control Overhead and Investment: While asset investments can support growth, ensure they do not overextend the company’s cash resources or create liquidity strain.
• Review Revenue Recognition and Expense Timing: The rise in accruals suggests timing issues that could be improved to smooth income and cost patterns.
• Engage with Financial Advice: Given the company’s early stage, consulting a financial advisor for growth planning and risk management might be beneficial.
• Maintain Compliance and Reporting Discipline: Continue timely filings and transparent reporting to support stakeholder confidence and access to potential funding.

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