POINTS OF POSSIBILITY LTD

Executive Summary

POINTS OF POSSIBILITY LTD is currently experiencing financial distress marked by negative working capital and a drastic reduction in net assets, indicating liquidity and equity depletion. Immediate focus on cash flow management, cost control, and capital strengthening is essential to avoid insolvency risks and restore financial stability.

POINTS OF POSSIBILITY LTD - Analysis Report

Company Number: 13085423

Analysis Date: 2025-07-29 14:56 UTC

Financial Health Assessment for POINTS OF POSSIBILITY LTD

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1. Financial Health Score: D

Explanation:
The company shows clear signs of financial distress in its latest fiscal year. The liquidity position has deteriorated significantly, with net current liabilities indicating a working capital deficit. The sharp reduction in net assets and shareholders’ funds from £2,400 in 2022 to £100 in 2023 signals a severe weakening of the company’s financial foundation. These symptoms suggest the company is struggling to maintain healthy cash flows and operational stability.

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2. Key Vital Signs

Metric	2023 Value (£)	Interpretation
Cash at bank	854	Very low cash reserves; risk of liquidity issues.
Current Liabilities	1,070	Slight decrease from prior year but still exceeding cash.
Net Current Assets	-216	Negative working capital; the company owes more short-term than it owns.
Net Assets / Shareholders' Funds	100	Drastically reduced from £2,400 in 2022, indicating erosion of equity.
Tangible Fixed Assets (Net)	390	Relatively small and depreciating asset base.
Profit and Loss Reserves	99	Near depletion, reflecting accumulated losses or low retained earnings.

Additional observations:

• The company holds minimal share capital (£1), typical for small private companies but offers little buffer for creditors.
• The single director and sole shareholder exercises full control, concentrating risk and decision-making.
• The company operates in “Other education not elsewhere classified” (SIC 85590), a sector potentially impacted by market demand shifts or operational challenges.

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3. Diagnosis: Financial Condition

POINTS OF POSSIBILITY LTD is exhibiting symptoms of financial strain akin to a patient with weakened cardiovascular function — its cash flow is insufficient to cover short-term liabilities, resulting in negative working capital. The drastic reduction in net assets and shareholders’ funds over one year signals significant losses or write-downs, which have depleted the company’s equity "immune system." Although the company remains active and compliant with filings, the balance sheet reveals it is operating with minimal financial reserves and limited asset backing.

The negative working capital (-£216) is a critical symptom, suggesting that current obligations exceed the company’s liquid resources and receivables. This can create difficulties in meeting operational expenses, supplier payments, or unexpected costs, increasing the risk of insolvency if conditions persist.

The reduction in cash from £3,216 to £854 further reflects a draining of liquidity, potentially due to operational losses or capital expenditure not matched by income.

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4. Recommendations: Prescriptions for Financial Wellness

To restore financial health and avoid a progression toward more severe distress (such as insolvency or forced restructuring), the company should consider the following steps:

• Cash Flow Management:

  • Implement rigorous cash flow forecasting and control to monitor inflows and outflows daily.
  • Prioritize payments and negotiate extended terms with creditors to ease short-term pressures.

• Cost Control:

  • Review and reduce non-essential expenses to preserve cash.
  • Assess staffing and operational costs, given the company currently employs only one person.

• Capital Injection:

  • Consider equity financing or shareholder loans to bolster working capital and restore net asset strength.
  • Explore grants or funding opportunities available to educational service providers.

• Revenue Enhancement:

  • Diversify service offerings or pursue new client segments to increase turnover and rebuild retained earnings.
  • Enhance marketing efforts to boost sales.

• Financial Monitoring:

  • Establish key performance indicators (KPIs) linked to liquidity and profitability.
  • Conduct monthly financial reviews with the director or appointed advisors.

• Professional Advice:

  • Engage with a financial advisor or insolvency practitioner early to explore recovery options and avoid late-stage distress.

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Medical Analogy Summary

The company’s financial "vital signs" show symptoms of distress: a weakened liquidity "heartbeat" and a depleted equity "immune system." Without prompt intervention resembling medical treatment—stabilizing cash flow and strengthening capital—the company risks moving toward a critical condition. Immediate steps to improve financial resilience are essential for recovery and sustained health.

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