SILICON LTD

Executive Summary

SILICON LTD is currently facing significant financial stress, evidenced by a sharp decline in working capital and net assets. While still solvent, the company’s liquidity position is weak, signaling potential cash flow challenges. Immediate action on cash management, cost control, and financing options is critical to stabilize and improve financial health.

SILICON LTD - Analysis Report

Company Number: 13274303

Analysis Date: 2025-07-20 17:46 UTC

Financial Health Assessment: SILICON LTD (As of 31 March 2024)

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1. Financial Health Score: D

Explanation:
SILICON LTD’s financial health score is graded as D, indicating signs of financial distress and vulnerability. The company has experienced a worrying decline in net assets and working capital over the last year, signaling potential liquidity and operational challenges. While it is still solvent, the sharp drop in net current assets from £87,793 in 2023 to just £3,149 in 2024 is a symptom of financial strain that requires immediate attention.

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2. Key Vital Signs (Core Metrics & Interpretation):

Metric	2024 Value (£)	2023 Value (£)	Interpretation
Net Current Assets (Working Capital)	3,149	87,793	Very low working capital; indicates tight liquidity and limited buffer to cover short-term obligations.
Net Assets (Equity)	3,949	88,367	Substantial decline in net assets; indicates erosion of company value and potential losses.
Current Assets	122,842	327,438	Significant reduction, especially cash and debtors; indicates cash outflow or collection issues.
Current Liabilities	119,693	239,645	Decreased liabilities but not enough to offset asset decline; still a substantial short-term debt burden.
Fixed Assets	800	1,199	Small fixed asset base consistent with micro-entity status; not a major factor but slight reduction noted.
Share Capital	100	100	Minimal share capital typical for a micro private limited company.
Employees (Average)	3	2	Slight increase in workforce, which could add cost pressure amid deteriorating financials.

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3. Diagnosis: What the Financial Data Reveals

The financial "vital signs" of SILICON LTD show a company under stress. The most alarming symptom is the drastic reduction in net current assets (working capital) from £87,793 in 2023 to just £3,149 in 2024. This points to a severe tightening of liquidity, meaning the company has lost much of its short-term financial cushion to cover immediate debts. Concurrently, net assets have plummeted by over 95%, indicating that the company’s overall capital base has been significantly eroded—likely due to operating losses, write-downs, or large outflows.

The sharp fall in current assets—particularly cash and debtors—suggests the company may be facing difficulties in collecting payments or has spent cash reserves to cover expenses. Although current liabilities have reduced, they remain high relative to current assets, placing strain on the company’s ability to meet short-term obligations—a symptom analogous to a patient’s blood pressure dropping dangerously low.

The increase in average employees from 2 to 3, despite deteriorating finances, could represent increased operational costs that the company may struggle to support without additional revenue or capital.

Overall, SILICON LTD appears to be in a fragile financial state with symptoms of cash flow distress and asset erosion. While not insolvent, the company is at risk of entering a "financial crisis" phase if corrective actions are not taken promptly.

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4. Recommendations: Specific Actions to Improve Financial Wellness

1. Improve Cash Flow Management:
   Conduct a detailed cash flow forecast to identify timing gaps. Accelerate debtor collections, negotiate extended payment terms with suppliers, and reduce non-essential expenses. Healthy cash flow is the lifeblood of business survival.

2. Cost Control and Efficiency:
   Review staffing and operational costs carefully. With only three employees, ensure each role is critical and aligned with revenue generation. Consider temporary cost-saving measures to preserve liquidity.

3. Capital Injection or Financing:
   Explore options for additional equity investment or short-term financing to restore working capital buffers. This could be through new shareholder funds or small business loans.

4. Review Pricing and Sales Strategy:
   Analyze market conditions and pricing to boost revenues. With activities in IT consultancy and software development, focus on high-margin projects or recurring revenue contracts.

5. Regular Financial Monitoring:
   Establish monthly financial reviews to track key metrics like cash balances, receivables aging, and liabilities. Early detection of issues is key to preventing deterioration.

6. Professional Advisory:
   Consider engaging a financial advisor or business turnaround specialist to assist in restructuring and strategy formulation—much like consulting a specialist when symptoms worsen.

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