PROMPT MANAGEMENT LTD

Executive Summary

Prompt Management Ltd is a young private limited company with positive net assets but showing early signs of financial fatigue due to declining revenue and minimal profits. While liquidity is currently sufficient, cash reserves are critically low, posing a risk of short-term cash flow stress. Strategic actions focused on boosting revenue, improving margins, and strengthening cash flow will be crucial to ensure a healthier financial future.

PROMPT MANAGEMENT LTD - Analysis Report

Company Number: 14314924

Analysis Date: 2025-07-20 11:53 UTC

Financial Health Assessment: PROMPT MANAGEMENT LTD (as of 31 August 2024)

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1. Financial Health Score: C

Explanation:
PROMPT MANAGEMENT LTD shows basic financial stability with positive net assets and working capital, but experiences symptoms of declining revenue and very slim profit margins. The company is in the early stages of its lifecycle, given its 2022 incorporation, and while it is not currently in distress, the financial vitality is weak and warrants attention to improve robustness.

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2. Key Vital Signs

Metric	2024 Value (£)	Interpretation
Turnover	13,590	Revenue has declined significantly from £22,835 in 2022, indicating reduced sales activity.
Gross Profit Margin	~25%	(3,382 / 13,590) - Indicates low margin on sales, tight cost control needed.
Operating Profit	128	Extremely low operating profit, indicating fragile operating performance.
Profit After Tax	94	Net profit is positive but marginal, suggesting limited buffer for reinvestment.
Fixed Assets	950	Small investment in tangible assets, showing some capital expenditure.
Current Assets	2,151	Includes cash (£155) and debtors (£1,996); cash is very low, indicating liquidity concerns.
Current Liabilities	1,163	Short-term obligations are manageable but substantial compared to cash reserves.
Net Current Assets	988	Positive working capital, a healthy sign for meeting short-term liabilities.
Net Assets (Equity)	1,938	Small but positive net worth, indicating that the company’s asset base exceeds liabilities.
Cash at Bank	155	Very low cash balance relative to liabilities, indicating potential liquidity stress.
Employee Count	1	Very small operation, which limits scalability but reduces fixed costs.

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3. Diagnosis — What the Financial Numbers Reveal

• Revenue Decline: The turnover has dropped from £22,835 in 2022 to £13,590 in 2024, indicating a symptom of reduced market demand or operational challenges.
• Profitability is Minimal: The operating profit margin is less than 1%, showing the company is barely breaking even after covering operational expenses.
• Liquidity Strain: Despite positive net current assets, the cash reserve is critically low (£155), suggesting the company may face short-term cash flow difficulties if debtors are not collected promptly.
• Asset Base and Capital Structure: The company has invested modestly in fixed assets (£950). Shareholders’ funds have grown slightly from £1,844 in 2022 to £1,938 in 2024, indicating retained earnings but limited growth.
• Small Scale Operations: With only one employee and a micro/small company exemption status, the business is in an embryonic phase with limited operational scale.
• No Signs of Financial Distress: There are no overdrafts or excessive creditors, and all filings are up to date, reflecting compliance and operational continuity.

Medical Analogy:
The company shows "stable vital signs" but with "symptoms of fatigue" (declining sales and profits) and "low energy reserves" (minimal cash). While not in critical condition, without intervention, it risks "financial malaise."

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4. Prognosis

• Short-Term Outlook: The company can meet its current obligations, but very tight cash flow means any delay in debtor payments or unexpected expenses could cause liquidity issues.
• Medium-Term Outlook: Without reversing the turnover decline or improving profit margins, the company may struggle to grow equity or invest in expansion, leading to stagnation.
• Long-Term Outlook: Sustainable growth depends on strategic actions to boost sales, improve operational efficiency, and build cash reserves. Otherwise, the company risks entering a "chronic financial illness" state marked by recurring cash flow stress.

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5. Recommendations to Improve Financial Wellness

• Enhance Revenue Generation: Investigate causes for turnover decline; consider diversifying customer base, improving marketing, or revising pricing strategies to increase sales volume and margins.
• Improve Cash Flow Management: Accelerate collection of debtors and manage payables prudently to increase cash reserves and avoid liquidity crunch.
• Cost Control: Carefully monitor administrative and cost of sales expenses to protect the already slim profit margins.
• Build Cash Reserves: Aim to increase cash holdings to at least cover 3-6 months of current liabilities, ensuring buffer against unexpected shocks.
• Asset Utilization: Evaluate the return on investment from fixed assets; optimize asset usage to improve efficiency.
• Strategic Planning: Consider appointing an experienced financial advisor or business mentor to support growth strategies and financial planning.
• Compliance and Governance: Maintain up-to-date filings and good corporate governance to avoid penalties and preserve business reputation.

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