PROBITY CARE LTD

Executive Summary

PROBITY CARE LTD has a solid equity base and growing fixed assets, indicating investment and retained earnings. However, persistent negative working capital highlights liquidity strains that require focused cash flow management and potential capital support. With proactive steps to improve short-term liquidity, the company’s financial health can stabilize and improve.

PROBITY CARE LTD - Analysis Report

Company Number: 13687225

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

Financial Health Assessment for PROBITY CARE LTD

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1. Financial Health Score: C

Explanation:
PROBITY CARE LTD shows some strengths but also clear warning signs. The company has positive net assets and growing fixed assets, indicating some investment and shareholder equity. However, persistent negative net current assets (working capital deficit) signal liquidity challenges—akin to a patient who has a healthy heart but is struggling with low blood pressure. The overall score "C" reflects a condition that is stable but requires close monitoring and corrective action.

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2. Key Vital Signs

Metric	2023 Value (£)	Interpretation
Fixed Assets	70,435	Increased from prior year, showing investment in long-term resources—healthy sign of growth.
Current Assets	16,579	Increased but remains low relative to current liabilities—signals limited short-term liquidity.
Current Liabilities	41,853	Increased significantly, leading to working capital deficit—potential liquidity "symptom."
Net Current Assets	-25,274	Negative working capital indicates the company may struggle to meet short-term obligations.
Net Assets (Equity)	44,061	Positive and nearly doubled from previous year, showing retained earnings or capital injection.
Shareholders’ Funds	44,061	Mirrors net assets; suggests owners’ investment remains intact despite liquidity issues.
Number of Employees	2	Consistent small size, reflecting micro-entity status; limited operational scale.

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3. Diagnosis

PROBITY CARE LTD exhibits a mixed financial health profile:

• Strengths:

  • Shareholders’ funds have increased, indicating the company is building equity and possibly profitable over time (despite no profit & loss data filed).
  • Fixed assets are growing, suggesting investment in operational capacity or infrastructure.

• Symptoms of Distress:

  • Negative net current assets for multiple years (2021-2023) indicate persistent working capital shortages. This is a liquidity "symptom" that the company may face challenges paying its bills on time without additional financing or cash inflows.
  • Current liabilities have increased disproportionately compared to current assets, worsening the liquidity position.
  • The company relies on long-term assets and shareholder funds to cover short-term debts, which is not ideal and could cause operational strain if cash flow tightens.

• Context:
  The company is a micro-entity in the employment placement sector (SIC 78109), with a stable but small employee base. The directors appear active and resident at the registered address, which may allow close management oversight.

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4. Recommendations

1. Improve Working Capital Management:

   • Focus on increasing current assets, particularly cash or receivables collection efficiency.
   • Negotiate longer payment terms with suppliers or seek short-term financing options to ease immediate liabilities.

2. Cash Flow Monitoring:

   • Implement tight cash flow forecasting to avoid liquidity "crises."
   • Explore opportunities to convert fixed assets into cash if liquidity worsens (e.g., sale and leaseback).

3. Profitability Transparency:

   • Although exempt from audit, consider preparing internal profit and loss statements to identify profit drivers or drains.
   • Explore routes to increase turnover and margins to generate positive cash flow from operations.

4. Equity or Debt Injection:

   • Given the micro size, a capital injection from shareholders or a small loan facility might stabilize liquidity.
   • Avoid excessive borrowing that could worsen current liabilities.

5. Maintain Compliance:

   • Continue timely filing of accounts and confirmation statements to avoid penalties and maintain stakeholder confidence.

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