SD COURSES LTD

Executive Summary

SD COURSES LTD is currently facing financial strain characterized by negative working capital and shareholders’ funds, indicating liquidity challenges and potential insolvency risk. Immediate focus should be on improving cash flow management, securing additional financing, and enhancing financial oversight to restore balance sheet health and ensure business continuity.

SD COURSES LTD - Analysis Report

Company Number: SC652314

Analysis Date: 2025-07-20 16:08 UTC

Financial Health Assessment for SD COURSES LTD

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1. Financial Health Score: D

Explanation:
The company is exhibiting early warning signs of financial distress, with a negative net asset position as of the latest accounts. While it previously showed positive working capital and shareholder funds, the most recent year reflects a deterioration in liquidity and equity, suggesting potential challenges in meeting short-term obligations and maintaining financial stability.

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2. Key Vital Signs

Metric	2024 (Latest)	2023 (Prior Year)	Interpretation
Current Assets	£16,214	£18,651	Slight decline in liquid and short-term assets.
Current Liabilities	£16,533	£16,221	Slight increase in short-term obligations, now exceeding current assets.
Net Current Assets (Working Capital)	-£319	£2,430	Shift from positive to negative working capital—a symptom of liquidity stress.
Shareholders’ Funds (Equity)	-£1,519	£978	Negative equity indicates liabilities exceed assets—a significant red flag.
Share Capital	£4	£4	Nominal share capital, typical for micro-entities.

Interpretation of Vital Signs:

• The shift from positive to negative net current assets ("working capital") indicates a tightening cash flow situation, akin to a patient whose blood pressure is dropping—indicating stress on vital functions.
• Negative shareholders’ funds reveal the company is technically insolvent on a balance sheet basis, which is a serious "symptom" signaling financial distress.
• The company's balance sheet is showing signs of "fatigue," where liabilities are outpacing assets, raising questions about going concern.

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3. Diagnosis

SD COURSES LTD, a micro private limited company operating in the education sector, has experienced a decline in its financial health over the last year. The company’s liquidity position has weakened, shifting to a negative working capital, which reflects potential difficulties in covering short-term debts with available current assets. More concerning is the negative shareholders’ funds, indicating that the company’s total liabilities now exceed its assets.

This condition is analogous to a patient whose vital signs—such as pulse and oxygen saturation—have started to falter, indicating an underlying illness that requires immediate attention. The absence of employees suggests the business might not have operational complexity, but the financial strain could hamper normal business activities.

No audit is required due to micro-entity status, but the lack of detailed profit and loss disclosure limits deeper insight into operational profitability or cash flow dynamics. The directors should be vigilant to prevent further deterioration.

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4. Recommendations

Immediate Actions:

• Conduct a Cash Flow Review: Assess short-term cash inflows and outflows to identify timing mismatches and critical liquidity needs. Consider preparing a cash flow forecast to anticipate periods of strain.
• Explore Financing Options: Given the negative net assets, the company should consider raising additional capital, either via shareholder loans, equity injection, or short-term credit facilities to strengthen the balance sheet and restore liquidity.
• Cost Control and Income Enhancement: Review operational expenses rigorously and explore ways to increase revenue or diversify income streams to improve profitability and working capital.
• Engage Professional Advice: Consult insolvency or restructuring specialists early if the financial position does not improve, to avoid formal insolvency processes.
• Improve Financial Reporting: Even as a micro-entity, maintaining detailed management accounts and profit and loss statements will help directors monitor the company’s financial health more effectively.

Medium-Term Actions:

• Strengthen Equity Base: Plan a recapitalization strategy to restore positive shareholder funds, which is critical for long-term sustainability.
• Monitor Liabilities: Negotiate payment terms with creditors to align outflows with inflows, easing liquidity pressure.
• Strategic Review: Evaluate the business model and market positioning to identify growth opportunities or necessary pivots.

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