Company Number: 14106766

Analysis Date: 2025-07-20 15:48 UTC

Financial Health Assessment for PHARMACO SERVICES LTD. (as at 31 May 2024)

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1. Financial Health Score: B

Explanation:
PHARMACO SERVICES LTD. shows a generally stable and improving financial position with positive net current assets and growing shareholders' funds, indicating healthy working capital management and equity growth. However, the company is very young (incorporated in 2022), with limited operational history and modest absolute cash reserves. The presence of a significant director loan also warrants cautious monitoring. Overall, the company is financially sound but still in an early development stage, hence a B grade reflecting solid but not yet mature financial health.

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2. Key Vital Signs

Metric	2024 Value	2023 Value	Interpretation
Current Assets	£31,311	£19,230	Increased current assets, indicating better short-term liquidity and assets available.
Cash at Bank	£16,382	£19,230	Slight decline in cash reserves but still healthy relative to liabilities.
Debtors	£14,929	£0	Introduction of trade debtors, normal for a growing business extending credit to customers.
Current Liabilities	£7,013	£5,840	A moderate increase in short-term obligations, still well covered by current assets.
Net Current Assets	£24,298	£13,390	Significant improvement, indicating strong short-term financial health and working capital.
Net Assets / Shareholders' Funds	£24,298	£13,390	Equity growth due to retained profits or capital injection, positive sign of company value.
Director Loan	£14,929	£0	Director has advanced funds to the company, which is a symptom of external funding support.
Average Employees	1	0	Company expanding from zero to one employee, signalling growth and operational activity.

Interpretation of Vital Signs:
The company displays a "healthy cash flow" environment with increasing net current assets and equity. The current ratio (current assets/current liabilities) is approximately 4.46 in 2024 (£31,311/£7,013), indicating excellent short-term liquidity and an ability to cover immediate debts multiple times over. The introduction of debtors shows normal business activity but should be monitored for collection efficiency to maintain liquidity.

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3. Diagnosis

PHARMACO SERVICES LTD. is in the early stages of its lifecycle but demonstrates encouraging financial "vital signs." The company has evolved from a cash-only position to managing receivables, signaling growth and expanding operations. The positive net assets and equity increase indicate retained earnings or capital injections, strengthening the financial foundation.

A noteworthy "symptom" is the director loan of £14,929, which is supporting the company’s cash flow. While this is often a positive sign of committed leadership, it also means the company depends partly on internal financing, which could create strain if not managed carefully.

The company's current liabilities are modest and well covered by current assets, indicating no immediate liquidity distress. However, as a young company, it lacks a long track record, so its ongoing financial health will depend on managing receivables, controlling costs, and growing revenues sustainably.

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4. Recommendations

• Maintain Strong Liquidity: Continue monitoring cash flows closely to ensure the company maintains its ability to pay short-term obligations without over-relying on director loans or external financing.
• Manage Debtors Efficiently: Implement robust credit control policies to ensure timely collection of outstanding debts and avoid cash flow bottlenecks.
• Build Cash Reserves: Aim to grow cash balances to buffer against operational fluctuations, reducing dependence on director advances.
• Plan for Growth: Consider gradual hiring and investment in business development to capitalize on growth opportunities, ensuring costs are controlled relative to revenue.
• Regular Financial Reviews: Conduct quarterly financial health checks to track key metrics and identify any emergent "symptoms" of financial stress early.
• Prepare for Audit Requirements: As the company grows, ensure compliance with statutory audit requirements and maintain transparent accounting practices.
• Director Loan Management: Formalize the terms of the director loan (repayment schedule, interest if any) to avoid future disputes and clarify company liabilities.

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