Company Number: OC434190

Analysis Date: 2025-07-29 20:07 UTC

Financial Health Assessment for SALTER & MCKENNA LLP (as of 31 March 2024)

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1. Financial Health Score: B

Explanation:
SALTERN & MCKENNA LLP shows solid improvement and stability in net assets and working capital, indicating generally healthy financial "vital signs." However, some symptoms of emerging liquidity strain and increased short-term liabilities suggest close monitoring. Overall, the financial condition is good but with cautionary signals.

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2. Key Vital Signs

Metric	2024 Value	Interpretation
Net Assets (Shareholders’ Funds)	£14,838	Healthy growth from £3,752 in 2023; strong equity base suggests financial resilience.
Current Assets	£9,392	Increase from £6,318 in 2023; positive sign of asset growth.
Cash at Bank	£6,692	Substantial increase from £361; indicates improved liquidity and cash management.
Debtors	£2,700	Decrease from £5,957; potentially better credit control or lower sales on credit.
Current Liabilities	£7,679	Increased significantly from £2,566; raises concerns about rising short-term obligations.
Net Current Assets (Working Capital)	£1,713	Positive but decreased from £3,752 in 2023; working capital remains positive but reduced, signaling tighter short-term liquidity.
Fixed Assets (Tangible)	£13,125	Newly acquired assets (plant & machinery), indicating investment in capacity or operations.
Profit & Loss Account	Not disclosed	Lack of published profit/loss figures limits full diagnostic clarity.

Summary of Vital Signs:
The LLP’s net assets and cash position have strengthened substantially, akin to a patient gaining strength after a period of weakness. However, the jump in current liabilities is a "symptom" of possible stress on short-term financial obligations, which could strain liquidity if not managed carefully.

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3. Diagnosis

SALTERN & MCKENNA LLP appears financially stable with a growing asset base and improved cash reserves, suggesting a "healthy heart" in terms of capital structure and liquidity. The acquisition of tangible fixed assets signals investment in operational capability, a positive sign of growth ambition.

However, the significant increase in current liabilities compared to prior years is a "symptom" of potential short-term financial pressure. This could be due to increased taxes and social security costs (£6,446), trade creditors, and accruals. The reduction in net current assets from £3,752 to £1,713, while still positive, may indicate tightening liquidity.

The absence of a profit and loss account filing limits insight into operational profitability and cash flow from core business activities, which is a critical diagnostic tool. Without this, it is harder to evaluate whether the underlying business is generating sustainable earnings or relying on external funding or asset sales.

Overall Diagnosis: The LLP is currently in a sound financial condition ("stable vital signs") but shows early "symptoms" of liquidity tightening. If the increase in current liabilities is due to short-term operational expenses, the LLP should ensure revenues and cash inflows keep pace to avoid distress.

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4. Recommendations

• Monitor Short-term Liabilities Closely:
  The rise in current liabilities is a key symptom that requires active management. Consider negotiating longer payment terms or restructuring liabilities to maintain healthy liquidity.

• Improve Cash Flow Forecasting:
  Develop detailed cash flow forecasts to anticipate periods of tight liquidity and plan accordingly. This will help avoid cash "arrhythmias" and maintain stable operations.

• Publish Profit & Loss Account:
  Although not mandatory under small LLP exemptions, filing a profit and loss statement provides valuable transparency for stakeholders and helps diagnose operational performance.

• Review Debtor Management:
  The decrease in debtors is positive, but maintaining tight credit control will help preserve cash flow health and prevent bad debts.

• Assess Asset Utilization:
  Ensure the new plant and machinery are effectively deployed to enhance revenue generation and operational efficiency.

• Tax Planning and Cost Control:
  The significant increase in taxes and social security costs suggests an area for review. Explore tax planning strategies and cost control measures to reduce financial burden.

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Executive Summary

SALTERN & MCKENNA LLP shows solid growth in net assets and cash reserves, indicating a generally healthy financial condition. However, the marked increase in current liabilities signals emerging liquidity challenges that require careful management. The LLP should focus on cash flow monitoring, liability management, and improved transparency to maintain its positive financial trajectory.