SM FOOTBALL ACADEMY LIMITED

Executive Summary

SM Football Academy Limited shows signs of financial strain with a significant drop in net assets and working capital, signaling emerging liquidity challenges. While currently stable, the company relies heavily on director loans and needs to strengthen its financial base through improved cash flow management and potential capital injection. Prompt action is advised to restore financial health and ensure sustainable operations.

SM FOOTBALL ACADEMY LIMITED - Analysis Report

Company Number: 13105186

Analysis Date: 2025-07-20 11:02 UTC

Financial Health Assessment for SM FOOTBALL ACADEMY LIMITED

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1. Financial Health Score: C

Explanation:
The company demonstrates modest financial stability with positive net current assets and net assets. However, the sharp decline in net assets from £1,799 in 2022 to £58 in 2023 signals emerging distress or financial strain. The presence of director loans as current assets and accruals nearly equal to net assets suggest liquidity concerns. Overall, the financial health is fair but fragile, warranting careful monitoring and remedial action.

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2. Key Vital Signs

Metric	2023	2022	Interpretation
Current Assets	£3,808	£3,574	Slight increase — indicates available short-term resources improving marginally.
Current Liabilities	£2,958	£1,775	Significant increase — rising obligations due within one year, potential liquidity pressure.
Net Current Assets (Working Capital)	£850	£1,799	Declined sharply — reduced buffer to cover short-term debts, a warning symptom.
Net Assets (Equity)	£58	£1,799	Collapsed — indicates erosion of company’s net worth, a serious red flag.
Share Capital	£2	£2	Minimal capital base, typical for micro-entity.
Accruals/Deferred Income	£792 (2023)	£0 (2022)	New liability category affecting net asset position, indicating accrued expenses or income received in advance.
Director Loans (Current Assets)	£3,108	£0	Substantial loans to directors, which are unsecured but expected to be repaid; represents a reliance on insider funding for liquidity.

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3. Diagnosis: What the Financial Data Reveals

SM Football Academy Limited operates within the micro-entity category and is engaged in other sports activities. The company’s balance sheet reveals symptoms of financial stress:

• Declining Net Assets: The steep drop in net assets from £1,799 to £58 is likened to a patient losing vital strength. This may result from increased liabilities, reduced profitability, or the recognition of accrued expenses (accruals/deferred income).
• Liquidity Concerns: Working capital has halved, indicating a diminished cushion to meet short-term obligations — akin to a patient with weakening pulse.
• Reliance on Director Loans: The company’s current assets include loans advanced by directors totaling £3,108, which are unsecured. While these loans provide a temporary financial boost, they represent a dependency on insider support rather than operational cash generation.
• No Employees: The absence of employees suggests a lean structure, possibly limiting operational scale but also reflecting low fixed costs.
• Micro-Entity Exemption: The company benefits from simplified accounting, which may mask some detailed financial nuances but is typical for its size.

In medical terms, the company exhibits symptoms of early financial distress: reduced reserves, increased liabilities, and reliance on short-term injections (director loans). The overall condition is not critical yet but requires intervention to avoid deterioration.

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4. Recommendations: Steps to Improve Financial Wellness

1. Strengthen Liquidity Management:

   • Convert director loans into more permanent equity or formalize repayment terms to reduce short-term liquidity risk.
   • Improve cash flow forecasting to anticipate and manage upcoming obligations.

2. Review Accruals and Deferred Income:

   • Investigate the nature of the £792 accruals/deferred income to ensure accurate recognition and timely settlement.

3. Enhance Profitability:

   • Explore revenue growth strategies or cost reductions to rebuild net assets and working capital.
   • Consider diversifying income streams within sports activities.

4. Capital Injection:

   • Consider a capital increase or external funding to bolster the equity base and reduce financial vulnerability.

5. Regular Financial Monitoring:

   • Implement monthly financial reviews to detect early warning signs akin to regular health check-ups.

6. Engage Financial Advisory Support:

   • Seek professional advice to optimize financial structure and ensure compliance with filing and reporting obligations.

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