SHIV SHAKTI LEICESTER LTD

Executive Summary

SHIV SHAKTI LEICESTER LTD shows stable short-term liquidity but is burdened by high long-term liabilities and eroding equity, signaling financial strain. Immediate focus should be on managing debt, improving profitability, and strengthening the equity base to secure long-term viability. The company’s working capital remains a positive sign, offering breathing room to implement corrective actions.

SHIV SHAKTI LEICESTER LTD - Analysis Report

Company Number: 14302449

Analysis Date: 2025-07-29 20:02 UTC

Certainly, let's conduct a comprehensive financial health assessment of SHIV SHAKTI LEICESTER LTD using the available financial and corporate data:

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1. Financial Health Score: C

Explanation:
The company demonstrates a stable but strained financial condition. While it maintains positive net assets and working capital, there is a notable decline in net assets year-over-year and significant long-term liabilities that nearly offset total assets. This indicates some financial stress but not immediate distress.

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2. Key Vital Signs

Metric	2024 Value (£)	Interpretation
Fixed Assets	195,327	Stable investment in long-term assets, slight decrease from 2023
Current Assets	101,586	Reasonable level of liquid and short-term assets
Current Liabilities	21,304	Low short-term debt, manageable with current assets
Net Current Assets	80,282	Healthy working capital (“cash flow buffer”)
Creditors > 1 Year (Long-term liabilities)	271,159	High level of long-term debt, a potential symptom of financial strain
Total Assets Less Current Liabilities	275,609	Positive but heavily leveraged due to long-term debts
Net Assets (Equity)	4,450	Very low equity base, decreased by more than 50% since last year, indicating erosion of shareholder value

Additional Notes:

• The company employs 3 people, consistent over the last two years.
• The company qualifies as a micro-entity, thus filing simplified accounts, which limits detailed profitability data.
• Directors have changed recently, but the current director has significant control (75-100% shares and voting rights).
• The company operates in retail sale of non-specialised stores with food, beverages, or tobacco predominating (SIC 47110), a sector with tight margins.

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3. Diagnosis

Financial Symptoms and Underlying Issues:

• Healthy Working Capital: The positive net current assets (£80k) indicate the company currently has enough short-term assets to cover immediate liabilities, akin to a patient having a stable pulse and respiration—good immediate liquidity health.

• High Long-Term Debt Burden: The long-term creditors (£271k) are very close to the total assets (£275k), showing a heavy debt load. This is a concerning symptom, analogous to a patient having high blood pressure—an underlying stress that requires management.

• Declining Net Assets: The drop in net assets from £9,917 to £4,450 in one year signals the company is losing retained earnings or shareholder value. This could be due to operational losses, depreciation, or other factors. This erosion is a warning sign ("symptom of distress") that the company’s financial resilience is weakening.

• Limited Equity Cushion: With equity so low, the company has little buffer to absorb shocks or losses, making it vulnerable if revenues decline or unexpected expenses arise.

• Stable Employment: The consistent number of employees suggests operational stability, but given the financial strain, efficiency and cost control should be closely monitored.

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4. Prognosis

If the current trends continue, the company may face increasing financial pressure due to its debt levels and declining equity. Without improvement in profitability or reduction of liabilities, there is risk of liquidity stress or inability to fund expansion. However, the healthy working capital provides a positive sign that immediate liquidity risk is low.

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5. Recommendations

To improve financial wellness and avoid further deterioration, consider the following actions:

• Debt Restructuring: Engage creditors to explore refinancing or extending repayment terms to reduce short-term pressure and long-term risk.

• Profitability Focus: Since detailed P&L data isn’t available, focus on increasing sales margins, reducing overhead costs, and improving operational efficiencies.

• Equity Injection: Consider capital injection either from existing shareholders or new investors to strengthen the equity base and provide a financial cushion.

• Cash Flow Monitoring: Maintain close monitoring of cash flow to ensure working capital remains healthy and anticipate liquidity needs.

• Financial Reporting Enhancements: Even as a micro-entity, consider internal management accounts to track profitability trends more closely.

• Director Stability: Ensure the leadership team is stable and aligned on strategic financial goals, as frequent director changes may impact continuity.

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