SEVENOAKS DIGITAL LIMITED

Executive Summary

SEVENOAKS DIGITAL LIMITED is a newly formed micro software development company showing stable but fragile financial health. While solvent, the company’s working capital slightly lags behind short-term liabilities, indicating tight liquidity. Focused financial management and building cash reserves will be critical to ensuring sustainable growth and avoiding cash flow distress.

SEVENOAKS DIGITAL LIMITED - Analysis Report

Company Number: 15222337

Analysis Date: 2025-07-29 16:55 UTC

Financial Health Assessment for SEVENOAKS DIGITAL LIMITED

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1. Financial Health Score: C

Explanation:
The company shows signs of a fragile financial condition typical of a newly established micro-entity. While it has positive net assets (£560), the net current assets are slightly negative (-£89), indicating a minor shortfall in working capital. This suggests a delicate balance between current assets and liabilities, akin to a patient with mild symptoms but no critical issues yet. The business remains solvent but requires careful financial management to maintain stability and grow.

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2. Key Vital Signs

• Fixed Assets: £649
  Interpretation: Minimal investment in long-term assets, typical for a micro software development business in its first year.

• Current Assets: £31,462
  Interpretation: Healthy cash and receivables pool, which is vital for daily operations and liquidity.

• Current Liabilities: £31,551
  Interpretation: Slightly exceeds current assets by £89, indicating a minor working capital deficit. This is a “symptom” of tight liquidity which needs monitoring.

• Net Current Assets (Working Capital): -£89
  Interpretation: A small red flag showing current liabilities just outweigh current assets, meaning the company could face short-term cash flow pressures.

• Total Assets Less Current Liabilities: £560
  Interpretation: Positive net assets indicate solvency but the margin is very narrow, akin to a patient just maintaining stable vital signs.

• Shareholders’ Funds (Equity): £560
  Interpretation: The owner has contributed or retained a modest amount of capital, reflecting the company’s early stage.

• Number of Employees: 2
  Interpretation: Small team size consistent with micro-entity status.

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3. Diagnosis

SEVENOAKS DIGITAL LIMITED, having been incorporated in late 2023, is in the initial phase of its business lifecycle. The financial "vitals" show the company is currently solvent and operational but with a very tight working capital position. The near balance between current assets and liabilities suggests the company is managing to meet short-term obligations but has little room for unexpected expenses or delays in cash inflows.

The financial statements reveal no audit requirement, typical for a micro company, and the director has properly filed accounts on time. The owner, Robert Nigel King, holds full control, which centralizes decision-making but also concentrates financial risk.

Underlying “symptoms” identified include:

• Marginal liquidity buffer — the company may face cash flow stress if current liabilities rise or payments are delayed.
• Limited asset base — the company has not invested heavily yet, which is normal for a startup but may limit growth capacity.

In medical analogy, the company is like a patient who is stable but requires close monitoring and lifestyle adjustments to prevent a relapse into financial distress.

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4. Recommendations

To improve financial wellness and strengthen the company’s position, the following steps are advised:

• Enhance Working Capital Management:
  Monitor receivables and payables closely to avoid liquidity crunches. Consider negotiating longer payment terms with suppliers or faster collections from clients to build a cash buffer.

• Build Cash Reserves:
  Aim to increase current assets beyond current liabilities by retaining earnings or injecting additional capital, enhancing the "healthy cash flow" vital sign.

• Control Costs:
  Maintain tight control over operating expenses to preserve cash, especially given the small team size and limited initial funding.

• Plan for Growth Investment:
  Gradually invest in fixed assets or technology to enhance productivity and revenue potential, but ensure these investments are aligned with cash flow capacity.

• Regular Financial Reviews:
  Conduct quarterly financial health checks to track liquidity, solvency, and profitability trends, allowing early detection of financial “symptoms” before they worsen.

• Consider External Funding Options:
  If growth ambitions require more capital, explore funding avenues such as small business loans, grants, or equity investment — but weigh the impact on control and debt service carefully.

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