SKINNY FIX LTD

Executive Summary

SKINNY FIX LTD shows signs of recovery with positive net assets and working capital for the first time after previous years of losses. However, liquidity remains strained due to minimal cash and a sizable tax liability. Focused cash flow management and addressing tax payments are critical to improving financial wellness and ensuring business sustainability.

SKINNY FIX LTD - Analysis Report

Company Number: 13300226

Analysis Date: 2025-07-29 15:23 UTC

Financial Health Assessment: SKINNY FIX LTD (as of 31 March 2024)

---

1. Financial Health Score: C

Explanation:
The company shows early signs of recovery from previous financial stress but remains fragile due to low asset base and significant tax liabilities. The positive turnaround in net current assets is a good sign, yet the overall financial cushion is minimal. This score reflects a cautious outlook with potential for improvement.

---

2. Key Vital Signs

Metric	2024 Value	Interpretation
Net Current Assets (Working Capital)	£614	Positive but very low; indicates the company has a small buffer to cover short-term liabilities. Healthy cash flow is limited.
Cash at Bank	£20	Almost negligible cash on hand, indicating tight liquidity and potential cash flow stress.
Debtors	£3,647	High relative to cash; significant amount owed by director’s loan account, indicating internal financing rather than external trade receivables.
Current Liabilities	£3,053	High current liabilities mainly due to corporation tax payable, which could pressure liquidity.
Net Assets (Shareholders’ Funds)	£614	Small positive net assets indicate minimal equity cushion but an improvement from previous negative net assets.
Profit and Loss Reserve	£514 (positive)	Shift from accumulated losses to retained earnings, suggesting recent profitability or capital injection.

---

3. Symptoms Analysis

• Liquidity Stress: The company holds very little cash (£20), which is a symptom of tight liquidity. This low cash balance could constrain day-to-day operations and ability to pay immediate expenses.
• Reliance on Director’s Loan: Debtors predominantly comprise a director’s loan (£3,647), showing internal funding support. This indicates limited external receivables and reliance on director financing to maintain operations.
• Tax Liability: Current liabilities include a significant corporation tax payable of £3,053, representing a looming financial obligation. This is a “symptom of distress” that could impair financial stability if not managed timely.
• Recovery from Previous Losses: The company moved from negative net assets (£-54 in 2023) to positive (£614 in 2024), reflecting improved financial health and possibly better operational performance or capital injections.
• Minimal Capital Base: The share capital remains very low (£100), typical for micro companies, but the overall capital base is very thin, limiting financial resilience.
• Employee Growth: The average number of employees increased from 1 to 2, indicating slight business growth.

---

4. Diagnosis

SKINNY FIX LTD exhibits early recovery signs from financial distress experienced in prior years, evidenced by the transition from negative to positive net assets and working capital. However, liquidity remains critically low due to minimal cash reserves and a heavy reliance on director loans. The company’s significant corporation tax liability is a red flag that could lead to cash flow problems if not addressed promptly.

The business operates in a niche sector (unlicensed carrier and motor vehicle maintenance) with small scale operations, consistent with its micro company classification. The current financial position is fragile but stable enough to continue operations if cash flow is managed carefully.

---

5. Prognosis

If the company can convert the director’s loan into cash or increase operational cash generation, it has a reasonable chance to strengthen liquidity and meet tax obligations. Without improvement in cash reserves or external financing, the business risks liquidity bottlenecks. Continued growth in revenue and prudent expense management will be essential to build a healthier financial cushion.

---

6. Recommendations

• Improve Cash Flow Management: Prioritize collecting any outstanding receivables and convert director loans into usable cash to build liquidity.
• Address Tax Liabilities: Engage with HMRC proactively to manage corporation tax payments, possibly arranging a payment plan to avoid penalties.
• Build Cash Reserves: Even a modest increase in cash on hand will create a vital safety net for operating expenses.
• Monitor Working Capital: Keep tight control on short-term liabilities and avoid unnecessary expenses to maintain positive net current assets.
• Explore External Financing: Consider small loans or equity injections to strengthen capital base if cash flow improvements are insufficient.
• Regular Financial Monitoring: Implement monthly cash flow forecasts and financial reviews to detect liquidity issues early.
• Director Support: Continue director financial support cautiously but aim to reduce reliance over time by growing the business’s own cash flow.

---

Summary

SKINNY FIX LTD is emerging from previous financial weakness and is currently in a fragile but positive position with low net assets and working capital. The company faces liquidity challenges, primarily due to low cash on hand and a significant corporation tax liability. With careful cash flow management and addressing tax obligations, the company can stabilize and improve its financial health.