SANSAI CONSULTANCY LIMITED
Executive Summary
SANSAI CONSULTANCY LIMITED shows moderate financial health with positive net current assets but faces liquidity challenges due to declining cash and rising liabilities. Increased borrowing and capital investments signal growth efforts but increase financial risk. Focused cash flow management and prudent debt control are essential to improve stability and support sustainable operations.
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This analysis is opinion only and should not be interpreted as financial advice.
SANSAI CONSULTANCY LIMITED - Analysis Report
Financial Health Assessment of SANSAI CONSULTANCY LIMITED
1. Financial Health Score: C
Explanation:
SANSAI CONSULTANCY LIMITED demonstrates some positive signs such as maintained net current assets and net assets, but also exhibits symptoms of financial strain, notably a significant increase in non-current borrowings and a marked decline in cash reserves. These mixed signals indicate a moderate financial condition with areas requiring careful management and improvement.
2. Key Vital Signs (Core Financial Metrics)
Metric | 2023 Value (£) | 2022 Value (£) | Interpretation |
---|---|---|---|
Current Assets | 60,859 | 99,050 | Declined substantially, mainly due to falling cash and debtors, signaling tightening liquidity. |
Cash at Bank | 29,630 | 53,500 | Nearly halved, a critical sign of reduced immediate liquidity or cash flow stress. |
Debtors | 31,229 | 45,550 | Decreased, could indicate better collections or reduced sales activity. |
Current Liabilities | 49,566 | 24,164 | More than doubled, indicating increased short-term obligations or creditor pressure. |
Net Current Assets | 52,718 | 74,886 | Decreased by about 30%, still positive but reduced working capital cushion. |
Non-Current Borrowings | 49,566 | 0 | Newly introduced significant long-term debt, increasing financial leverage and risk. |
Net Assets (Shareholders’ Funds) | 46,286 | 75,385 | Fell by around 39%, reflecting reduced retained earnings and increased liabilities. |
Tangible Fixed Assets | 43,134 | 499 | Sharp increase due to acquisition of motor vehicles and equipment, reflecting investment. |
Share Capital | 2 | 1 | Minimal and unchanged, typical for a micro to small private company. |
Number of Employees | 1 | 1 | Very small workforce, low operational complexity. |
3. Diagnosis: What the Numbers Reveal
Liquidity & Cash Flow Health:
The "vital sign" of cash at bank has weakened significantly, halving over one year, which signals symptoms of liquidity stress. The company may be experiencing tighter cash flows, possibly due to increased expenses, investments, or slower receivables collection. The decline in debtors partly offsets this but does not fully compensate for cash reduction.Working Capital & Short-Term Obligations:
While net current assets remain positive, the doubling of current liabilities is a concern. This means the company faces higher short-term debts or payables, which could pressure day-to-day operations if not managed carefully.Leverage & Solvency:
The introduction of £49,566 in long-term borrowings is a new development, increasing financial leverage. While borrowing can support growth or investment (as seen in tangible assets), it raises fixed financial obligations and risk, especially with reduced cash reserves.Asset Base & Investment:
Tangible fixed assets jumped from £499 to £43,134, mainly due to motor vehicles and equipment purchases. This indicates capital investment, possibly to support business expansion or operational needs. However, this ties up cash and adds depreciation expense, which could strain profitability.Equity & Reserves:
Net assets and retained earnings have dropped by nearly 40%, reflecting either operating losses, dividend payments, or asset write-downs. This erosion reduces the financial "buffer" against adverse business conditions.Size and Complexity:
The company remains very small with a single employee (the director) and minimal share capital. Such small companies often have tighter margins and less resilience to shocks.Accounting and Compliance:
The company is up to date with filings and not overdue, indicating good governance and compliance.
Overall Diagnosis:
SANSAI CONSULTANCY LIMITED exhibits symptoms akin to a patient with moderate financial stress — liquidity is weakening, liabilities are rising, and equity is diminishing, but the company is not yet in critical condition. The healthy net current assets and ongoing investments suggest potential for recovery if cash flow is managed carefully and borrowing is serviced reliably.
4. Recommendations: Specific Actions to Improve Financial Wellness
Improve Cash Flow Management:
Implement stricter controls on receivables collection and consider negotiating longer payment terms with suppliers to ease short-term cash pressure. Monitor cash daily to avoid liquidity crunches.Manage Borrowing Prudently:
Review the terms and necessity of the recent borrowings. Ensure debt servicing is sustainable relative to operating cash flows. Avoid additional borrowing unless generating clear returns.Optimize Working Capital:
Reduce current liabilities where possible by negotiating payment extensions or settling debts early if beneficial discounts exist. Evaluate inventory and debtor management to free up working capital.Monitor Fixed Asset Utilization:
Ensure the newly acquired tangible assets are contributing effectively to revenue generation to justify their cost and associated depreciation expenses.Enhance Profitability:
Since detailed P&L is unavailable, review pricing, cost control, and operational efficiency to restore or grow retained earnings.Contingency Planning:
Prepare for potential downturns given the limited cash buffer. Maintain an emergency cash reserve and explore alternative funding sources if needed.Regular Financial Reviews:
Conduct quarterly financial health checks to detect early signs of distress and adapt strategies promptly.
Executive Summary
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