SMART IMPROVEMENTS CONSULTANCY LTD

Executive Summary

SMART IMPROVEMENTS CONSULTANCY LTD is currently facing liquidity challenges, evidenced by negative net current assets and a sharp decline in current assets, although it maintains positive net equity. The company is not insolvent but should prioritize improving cash flow and working capital management to avoid financial distress and support sustainable growth.

SMART IMPROVEMENTS CONSULTANCY LTD - Analysis Report

Company Number: 13250305

Analysis Date: 2025-07-20 19:15 UTC

Financial Health Assessment for SMART IMPROVEMENTS CONSULTANCY LTD

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1. Financial Health Score: C

Explanation:
The company shows some signs of financial strain, particularly in its liquidity position, but it is maintaining positive net assets and shareholder equity which indicate some stability. Overall, the financial health is fair but with warning signs requiring remedial action.

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2. Key Vital Signs

Metric	2024 Value	Interpretation
Fixed Assets	£26,620	Moderate investment in long-term assets, increased from previous year—a possible sign of growth.
Current Assets	£4,196	Very low short-term assets (cash, receivables), sharply decreased from £22,968 last year.
Current Liabilities	£27,521	High short-term debts to be settled within the year.
Net Current Assets	-£23,325	Negative working capital, indicating liquidity stress; company may struggle to meet short-term obligations.
Total Assets Less Current Liabilities	£3,295	Positive but low net assets after covering current liabilities.
Net Assets / Shareholders Funds	£2,575	Positive equity but small in absolute terms, reflecting a modest cushion for creditors.
Share Capital	£1.00	Nominal share capital, typical for micro-entities.

What these vital signs indicate:

• Healthy cash flow is questionable due to the sharp drop in current assets and a substantial negative net working capital.
• Symptoms of distress are present in liquidity with more current liabilities than current assets, suggesting potential difficulty in paying short-term debts without additional financing or asset sales.
• The rise in fixed assets indicates reinvestment or growth ambition but may have contributed to cash strain.
• Positive net assets and shareholder funds show the company is not insolvent yet, but the margin of safety is thin.

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3. Diagnosis

SMART IMPROVEMENTS CONSULTANCY LTD is currently in a fair but vulnerable financial condition. The company’s liquidity symptoms—negative net current assets and a significant drop in current assets—are concerning and suggest it might face challenges in meeting its short-term obligations promptly unless it can convert fixed assets to cash or secure additional funding.

The company’s capital structure shows a very small share capital base, typical for micro-entities, and retained equity that has increased slightly from the prior year. This indicates some accumulation of value but on a modest scale.

The financial data does not indicate insolvency or immediate threat of liquidation; however, the working capital deficiency is a red flag. This may be due to extended payment terms from customers, slow collection of receivables, or increased short-term borrowing.

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4. Recommendations

To improve financial health, the company should consider the following actions:

• Improve liquidity management:
  • Accelerate collection of receivables and manage payables to ensure sufficient cash flow.
  • Review credit terms with customers and suppliers to balance cash inflows and outflows better.
• Consider short-term financing options:
  • Secure a working capital facility or overdraft to cover temporary cash shortages and avoid distress.
• Optimize asset utilization:
  • Evaluate fixed assets to identify any underused or non-essential assets that could be sold to improve cash balances.
• Enhance financial planning and forecasting:
  • Implement a rolling cash flow forecast to anticipate liquidity issues and plan accordingly.
• Cost control:
  • Review expenses to ensure tight control over operational costs to protect margins and cash reserves.
• Monitor financial metrics regularly:
  • Track net current assets and liquidity ratios monthly to detect early signs of distress.

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