SHARPER COMMERCIAL LIMITED

Executive Summary

Sharper Commercial Limited has a strong asset base anchored by investment property but exhibits clear signs of liquidity stress with a significant working capital deficit. While equity growth indicates underlying profitability, the company must urgently improve cash flow management and debtor collections to ensure operational stability and avoid financial distress. Focused financial controls and leveraging fixed assets can improve the short and long-term financial outlook.

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Company Analysis

This analysis is opinion only and should not be interpreted as financial advice.

SHARPER COMMERCIAL LIMITED - Analysis Report

Company Number: 14395958

Analysis Date: 2025-07-29 20:23 UTC

Financial Health Assessment for SHARPER COMMERCIAL LIMITED


1. Financial Health Score: C

Explanation:
The company shows a moderately concerning financial position with symptoms of liquidity stress but some signs of stability in asset value and equity growth. The negative net current assets (working capital deficit) indicate short-term liquidity issues, but positive net assets and equity growth provide a cushion. The score reflects a need for attention to cash flow management and creditor obligations to avoid financial distress.


2. Key Vital Signs

Metric Value (2025) Interpretation
Current Assets £302,758 Represents short-term assets available – moderate but declining from previous year.
Cash on Hand £52,003 Cash available improved from £26,844 to £52,003, a positive sign for liquidity.
Debtors £250,755 Large amount tied up in receivables; higher than cash, indicating potential cash flow lag.
Current Liabilities £684,756 High short-term debts exceed current assets, signaling potential liquidity strain.
Net Current Assets (Working Capital) -£381,998 Negative working capital, a symptom of liquidity distress; company may struggle to meet short-term obligations.
Total Assets Less Current Liabilities £243,002 Positive but declining, showing asset base after covering short-term liabilities.
Creditors Due After One Year £131,250 Medium-term debt secured on investment property – manageable if cash flows improve.
Net Assets / Shareholders’ Funds £111,752 Equity increased from £75,961 to £111,752, indicating retained earnings growth and overall net worth increase.
Investment Property (Fixed Assets) £625,000 Stable, non-current asset providing capital security and potential income generation.

Vital Sign Summary:

  • The company has a healthy asset base anchored by the investment property valued at £625,000.
  • However, there is a clear symptom of distress in liquidity, with current liabilities more than double current assets and a significant working capital deficit.
  • Cash position has improved but remains modest relative to current liabilities.
  • Shareholders’ equity growth is a positive sign, indicating profitability and value creation over time.

3. Diagnosis

Sharper Commercial Limited presents a mixed financial health profile:

  • Liquidity Strain (Working Capital Deficiency): The negative net current assets (-£381,998) signal that the company may face challenges in meeting short-term obligations as they fall due. This is a classic symptom of cash flow stress, which could lead to operational difficulties if not addressed.

  • Asset Strength: The company holds a significant investment property valued at £625,000, which provides a strong foundation of fixed assets and potential rental income or capital appreciation. This 'healthy asset heart' supports net assets and shareholder funds.

  • Improving Equity Position: The increase in shareholders’ funds from £75,961 to £111,752 over one year suggests retained earnings and possibly profitable operations, which is encouraging for long-term viability.

  • High Debtors: A large portion of current assets is tied up in debtors (£250,755), indicating that cash inflows may be delayed due to outstanding receivables. This can exacerbate liquidity issues if collection is slow.

  • Borrowings and Debt Structure: The company has secured bank loans totaling £206,250, with £75,000 due within one year and £131,250 beyond one year. While manageable relative to asset value, combined with high short-term creditors, this adds to financial pressure.

  • No Employees Reported: The absence of employees suggests the company may operate with minimal overhead, which could reduce fixed costs and improve cash management flexibility.

Overall Diagnosis:
Sharper Commercial Limited is currently experiencing liquidity symptoms that could challenge day-to-day operations if cash inflows are not accelerated. However, the solid investment property asset and improving equity indicate the company is not in critical distress but requires focused financial management to avoid potential crises.


4. Recommendations

To enhance financial wellness and address symptoms of distress, the following actions are advisable:

  1. Improve Debtor Collection:

    • Accelerate collection efforts on outstanding debtors to convert receivables into cash faster.
    • Consider offering early payment discounts or stricter credit terms to reduce debtor days.
  2. Manage Short-term Liabilities:

    • Negotiate with creditors to extend payment terms where possible to ease immediate cash flow pressure.
    • Prioritize repayment of high-interest or urgent liabilities to avoid penalties and preserve creditworthiness.
  3. Enhance Cash Reserves:

    • Maintain or grow the cash buffer beyond current £52,003 to better cover unforeseen expenses or liquidity gaps.
  4. Monitor and Optimize Costs:

    • Review operating expenses carefully to maintain low overhead, especially since no employees are currently reported.
  5. Leverage Investment Property:

    • Explore opportunities to generate rental income or refinance the property to improve liquidity, if not already done.
    • Regularly reassess the fair market value of the property to ensure it reflects true asset strength.
  6. Financial Planning and Forecasting:

    • Implement robust cash flow forecasting to anticipate liquidity needs and avoid surprises.
    • Consider professional advice on managing working capital and debt structure for sustainability.
  7. Transparency and Reporting:

    • Although the company is exempt from audit, providing regular internal financial reviews can help early detection of financial stress.


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