POST MAGIC LTD

Executive Summary

POST MAGIC LTD is currently experiencing significant financial distress, characterized by negative net assets and insufficient liquidity to meet short-term obligations. Without urgent capital support and debt restructuring, the company faces ongoing solvency challenges. Immediate actions to improve cash flow, renegotiate debts, and optimize asset use are critical to restore financial health and ensure sustainable operations.

POST MAGIC LTD - Analysis Report

Company Number: 13502088

Analysis Date: 2025-07-29 17:54 UTC

Financial Health Assessment for POST MAGIC LTD (As at 31 July 2024)

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1. Financial Health Score: D

Explanation:
POST MAGIC LTD shows clear signs of financial distress. The company has negative net assets and shareholder funds, indicating insolvency on a balance sheet basis. Working capital is negative, showing liquidity issues. There are no indications of improvement compared to prior years, and no cash or near-cash assets to cover current liabilities. This places the company in a precarious financial position, warranting a below-average grade.

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2. Key Vital Signs

Metric	2024 Value	Interpretation
Fixed Assets	£66,029	Stable long-term assets over last three years; however, may be illiquid or obsolete.
Current Assets	£177	Critically low liquid assets, indicating very limited cash or receivables to meet short-term needs.
Current Liabilities	£85,550	High short-term debts due within a year, creating immediate cash flow pressure.
Net Current Assets	-£523	Negative working capital; "symptom of distress" meaning company cannot cover short-term debts.
Total Assets Less Current Liabilities	£65,506	Relatively stable but overshadowed by long-term liabilities.
Long-term Liabilities	£85,550	Significant debt due beyond one year, increasing financial risk and interest burden.
Net Assets / Shareholders Funds	-£20,044	Negative equity shows accumulated losses exceeding assets; a serious "health warning."
Employees	1	Micro-entity scale indicates limited operational scope and resource constraints.

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3. Diagnosis: Financial Condition Analysis

POST MAGIC LTD is in a fragile financial state, evidenced by persistent negative net assets and shareholder funds, which reflect accumulated losses beyond the company's asset base. The company’s liquidity is severely impaired, with current assets (mainly cash or receivables) insufficient to cover even the small stated current liabilities, resulting in negative working capital — a classic "cash flow illness" symptom.

The significant fixed assets figure suggests some investment in long-term resources, but these assets are either illiquid or not generating sufficient income to service debts. The long-term liabilities are substantial relative to assets, indicating a heavy debt load that could lead to solvency challenges if not managed.

The company’s financials have shown decline since incorporation, with net liabilities worsening from -£8,760 in 2021 to -£20,044 in 2024. This trend signals ongoing losses or insufficient capital injection.

While the business is small (micro-entity) and has only one employee (the director), its financial difficulties could impact its ability to sustain operations without external support or restructuring.

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4. Recommendations: Prescriptions for Financial Wellness

1. Improve Liquidity:

   • Seek immediate capital injection from the owner or external investors to restore positive working capital.
   • Accelerate collection of any receivables and reduce non-essential expenses to preserve cash flow.

2. Debt Restructuring:

   • Negotiate with creditors to restructure or extend repayment terms on current and long-term liabilities to alleviate short-term pressure.
   • Explore refinancing options with lower interest rates or convertible debt to reduce financial burden.

3. Asset Utilization or Disposal:

   • Evaluate fixed assets for potential sale or lease to generate cash if not essential to core operations.
   • Consider whether assets are being fully utilized or represent “non-performing assets” draining resources.

4. Revenue Generation & Cost Control:

   • Enhance marketing and sales efforts to increase turnover, especially leveraging the social marketing tool platform.
   • Implement strict cost controls to reduce overhead and improve operational efficiency.

5. Financial Monitoring & Reporting:

   • Establish regular financial reviews (monthly cash flow forecasting) to detect early signs of financial distress.
   • Engage professional advice for turnaround planning and compliance.

6. Governance & Transparency:

   • Maintain clear records and communicate financial challenges with stakeholders candidly to build trust and collaboration.

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