Company Number: 13233739

Analysis Date: 2025-07-29 14:26 UTC

Financial Health Assessment for SOLOS SHOMAX LTD (as of 31 March 2024)

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1. Financial Health Score: C

Explanation:
SOLOS SHOMAX LTD demonstrates moderate financial health with some positive working capital but signs of declining liquidity and a significant reduction in cash reserves. The company maintains positive net current assets and shareholders' funds, indicating solvency, but the sharp drop in cash and overall net assets from the prior year signals symptoms of financial stress that require attention.

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2. Key Vital Signs

Metric	2024 Value	2023 Value	Interpretation
Current Assets	£175,832	£879,966	Sharp decrease, driven mainly by cash reduction.
Cash at Bank	£14,419	£722,273	Significant drop indicates liquidity tightening ("dry throat").
Debtors	£161,413	£157,693	Stable, showing steady receivables management.
Current Liabilities	£83,373	£575,871	Substantial decrease, easing short-term debt burden.
Net Current Assets	£92,459	£304,095	Positive working capital but sharply reduced, indicating less buffer.
Shareholders’ Funds (Equity)	£92,459	£304,095	Positive but declining equity base, reflecting reduced retained profits.
Share Capital	£100	£100	Nominal, typical for small private companies.

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3. Diagnosis: Underlying Business Health

• Liquidity Status: The company’s liquidity has weakened markedly over the last year, with cash reserves dropping by over 98%. This signals a "dry throat" symptom, meaning the company may struggle to meet immediate obligations without additional cash inflows or financing.

• Working Capital: Net current assets are positive, which is a "healthy pulse" indicating the company can cover short-term liabilities. However, the reduction from £304k to £92k suggests the margin of safety has narrowed considerably.

• Receivables Management: Debtors remain stable, reflecting consistent credit control. This is a positive sign, showing the company can collect amounts due without significant delays.

• Liabilities: Current liabilities fell significantly, which may be due to repayments or restructuring of short-term obligations. This reduction eases pressure but also corresponds with decreased current assets.

• Equity Position: The shareholders’ funds have dropped by about 70%, indicating that retained earnings or reserves have been depleted, a "symptom of distress" possibly linked to operational challenges or investments that have not yet yielded returns.

• Going Concern: Directors affirm confidence in the company’s ability to continue as a going concern, supported by shareholder backing and long-term plans. This suggests that despite short-term liquidity concerns, the company may be positioned for recovery.

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4. Recommendations: Steps to Improve Financial Wellness

• Improve Cash Flow Management:
  Prioritize accelerating cash inflows and managing outflows carefully to rebuild cash reserves. Consider tightening payment terms or improving invoicing efficiency.

• Liquidity Monitoring:
  Regularly track liquidity ratios and cash flow forecasts to detect and address potential shortages early. Maintaining a "healthy cash flow" is critical.

• Review Debtors and Credit Policy:
  Even though debtors are stable, ensure credit risk is minimized and collections are prompt to avoid future liquidity strain.

• Cost Control and Profitability:
  Analyze operational expenses and identify areas to reduce costs without compromising growth. Improving profitability will help restore equity reserves.

• Explore Funding Options:
  If cash flow remains tight, consider short-term financing or shareholder loans to bridge gaps while maintaining operational stability.

• Strategic Review:
  Assess the impact of investments or projects reflected in "exceptional income" notes to ensure they are contributing positively to long-term financial health.

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Medical Analogy Summary

SOLOS SHOMAX LTD's financial "vital signs" show a company with a stable heart (positive equity and working capital) but struggling with a dehydrated circulatory system (severely reduced cash). The company is currently stable but walking a tightrope where liquidity could become a limiting factor. With timely intervention—like rehydrating cash flow and managing expenses—the company can regain strength and sustain healthy operations.

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