QA FINANCE LTD

Executive Summary

QA Finance Ltd shows clear symptoms of financial distress with a sharp decline in liquidity and equity in the latest year. Immediate focus on cash flow management, cost control, and potential capital injection is critical to prevent further deterioration. With proactive measures, the company can stabilize and work towards a healthier financial position.

QA FINANCE LTD - Analysis Report

Company Number: 13527920

Analysis Date: 2025-07-20 17:47 UTC

Certainly. I will conduct a comprehensive financial health assessment of QA Finance Ltd based on the available data, using a diagnostic approach akin to evaluating a patient's health.

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1. Financial Health Score: D

Explanation:
QA Finance Ltd shows significant signs of financial distress in the latest reported year (FY ending March 31, 2025). The drastic reduction in net current assets and net assets from £15,902 in 2024 to just £1,240 in 2025 signals a sharp deterioration in liquidity and overall financial stability. This score reflects a warning that the company is experiencing symptoms akin to a serious illness that requires urgent intervention.

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2. Key Vital Signs (Financial Metrics) and Interpretation

Metric	2023-24 (Previous Year)	2024-25 (Latest Year)	Interpretation
Current Assets	£20,657	£9,730	Significant drop (~53%) indicates depletion of liquid resources (cash, receivables).
Current Liabilities	£4,755	£8,490	Increased by ~78%, increasing short-term obligations pressure.
Net Current Assets	£15,902	£1,240	Drastic decline suggests working capital is barely positive — symptoms of liquidity strain.
Net Assets / Shareholder Funds	£15,902	£1,240	Shows severe erosion of equity, indicating accumulated losses or asset write-downs.
Employees	2	2	Stable headcount, but financials indicate they may be under strain.

Additional Observations:

• The company qualifies as a Micro-entity, with minimal filing requirements and a small operational scale.
• The sole director and 100% shareholder is Kathryn Emma Johnson, a Chartered Accountant, which should aid sound governance and financial oversight.
• No overdue filings or signs of regulatory non-compliance, indicating formal compliance is maintained.

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3. Diagnosis: What the Numbers Reveal About Business Health

• Liquidity Crisis: The sharp reduction in current assets combined with rising current liabilities is a clear symptom of deteriorating liquidity, akin to a patient running a high fever—an acute warning sign. The company may be struggling to pay its short-term debts, risking operational disruption.

• Equity Erosion: The net assets have fallen by over 90% year-on-year, indicating the company is burning through its reserves or suffering losses. This resembles a weakening immune system, suggesting the business is vulnerable and has limited buffer to absorb shocks.

• Operational Scale and Stability: With just two employees and micro-entity status, the company is small and likely sensitive to cash flow fluctuations. It may lack the diversified revenue streams or capital structure to withstand financial stress.

• No Audit Requirement: As a micro-entity, QA Finance Ltd is exempt from audit, which limits external scrutiny. While this reduces costs, it also means financial issues may go unnoticed until severe.

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4. Recommendations: Specific Actions to Improve Financial Wellness

1. Urgent Cash Flow Management:

   • Conduct a detailed cash flow forecast to identify short-term cash requirements.
   • Prioritize collection of receivables and negotiate extended payment terms with creditors to ease liquidity pressure.

2. Cost Control and Expense Review:

   • Review all operational expenses and reduce non-essential costs to preserve cash.
   • Consider renegotiating supplier contracts or deferring discretionary spending.

3. Capital Injection or Financing:

   • Explore options for additional equity investment or short-term financing to restore working capital levels and stabilize net assets.
   • Given the director's accounting background, consider formal discussions with financial institutions or investors.

4. Business Model Assessment:

   • Analyze revenue streams and client base to identify causes of asset depletion.
   • Evaluate potential for growth or diversification to improve resilience.

5. Regular Monitoring and Reporting:

   • Implement monthly financial reviews to catch early warning signs.
   • Consider engaging an external advisor to provide independent oversight.

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Medical Analogy Summary

QA Finance Ltd’s financial condition resembles a patient who has experienced a sudden and severe drop in vital signs (cash and equity), indicating acute distress. The company is at risk of insolvency if immediate remedial action is not taken. Just as a doctor would prescribe urgent treatment and lifestyle changes, the company must aggressively manage cash flow and consider capital support to recover its financial health.

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