SKEL TECH LTD

Executive Summary

Tavia Studios Ltd, a newly established software development company, currently exhibits early-stage financial strain characterized by negative working capital and declining equity. While not in immediate distress, the liquidity and capital base weaknesses suggest a cautious outlook requiring improved cash management and potential capital support. With proactive financial controls and strategic planning, the company can stabilize and build a healthier financial foundation.

TAVIA STUDIOS LTD - Analysis Report

Company Number: 15018854

Analysis Date: 2025-07-29 20:51 UTC

Financial Health Assessment for TAVIA STUDIOS LTD

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1. Financial Health Score: C (Fair)

Explanation:
Tavia Studios Ltd has a modest equity base and shows signs of working capital strain with negative net current assets in the latest year. The company is young (incorporated in 2023) and has limited operational history and scale. While it currently remains solvent with positive net assets, the declining liquidity position and reduced net assets suggest caution. This score reflects a business in its early stage facing some financial discomfort but not yet in critical distress.

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2. Key Vital Signs (Core Financial Metrics):

Metric	2025 Value	2024 Value	Interpretation
Cash at bank	£4,094	£4,011	Stable cash reserves; small buffer for expenses
Current Liabilities	£5,201	£3,992	Increase signals rising short-term obligations
Net Current Assets (Working Capital)	-£1,107	£19	Shift from slightly positive to negative; liquidity warning
Net Assets (Equity)	£693	£2,419	Decline in net assets; erosion of shareholder funds
Shareholders’ Funds	£693	£2,419	Mirrors net assets; indicates retained losses
Tangible Fixed Assets (Net)	£1,800	£2,400	Decrease due to depreciation; no significant new investment
Employees	0	0	Sole director operation; no wage burden

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3. Diagnosis: What the Financial Data Reveals About Business Health

• Liquidity Symptoms: The company’s net current assets have turned negative (£-1,107), meaning current liabilities exceed current assets. This is a symptom of liquidity stress, akin to a patient showing signs of dehydration — the company has less immediate cash and short-term assets relative to its short-term debts.

• Equity Erosion: Net assets and shareholders’ funds have dropped significantly from £2,419 to £693, indicating accumulated losses or distributions exceeding profits. This signals a weakening financial "immune system" and requires attention to prevent insolvency risk.

• Operational Scale: With no employees and minimal fixed asset investments, the company is likely in a startup phase, possibly pre-revenue or early revenue generation. The small cash balance suggests limited operational runway.

• Director & Control: The sole director and 100% controlling shareholder model concentrates decision-making but may limit access to external expertise and capital.

• Financial Reporting: The company is exempt from audit due to small size, which is typical but means less external scrutiny of financial health.

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4. Recommendations: Specific Actions to Improve Financial Wellness

• Improve Liquidity:

  • Action: Focus on managing payables and accelerating receivables to restore positive working capital. Consider arranging short-term financing or overdraft facilities to cushion cash flow.
  • Analogy: Like administering IV fluids to a dehydrated patient, injecting liquidity can stabilize day-to-day operations.

• Cost Control & Revenue Enhancement:

  • Action: Since there are no employees, ensure operational expenses are minimal and aligned with revenue inflows. Explore opportunities to increase sales or service contracts to rebuild equity.
  • Analogy: Strengthen the heart by improving blood (cash) flow through better income generation.

• Capital Injection:

  • Action: The shareholder might consider injecting more equity to reinforce the capital base, improving solvency and the ability to absorb losses.
  • Analogy: Boosting the immune system with fresh resources to fight off financial illness.

• Financial Monitoring:

  • Action: Implement regular cash flow forecasting and financial health checks to detect and address symptoms early.
  • Analogy: Routine health screenings to catch relapse or new issues before they become critical.

• Seek Professional Advice:

  • Action: Engage with financial advisors or accountants for strategic planning, tax efficiency, and potential funding routes.

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