SOTEIRA SYSTEMS LTD

Executive Summary

Soteira Systems Ltd is a newly incorporated micro enterprise showing early signs of financial distress with negative working capital and shareholders' funds, indicating liquidity and solvency challenges. Immediate focus on improving cash flow, managing inventory, and securing additional capital is essential to stabilize the company's financial health. Proactive financial management and strategic growth initiatives will be critical to reversing current negative trends and ensuring long-term viability.

SOTEIRA SYSTEMS LTD - Analysis Report

Company Number: 14540877

Analysis Date: 2025-07-20 14:39 UTC

Financial Health Assessment for SOTEIRA SYSTEMS LTD as of 31 December 2023

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1. Financial Health Score: D

Explanation:
Soteira Systems Ltd is currently exhibiting financial distress symptoms, primarily due to negative working capital and shareholders' funds. The company’s financial "vital signs" indicate it is operating with a deficit in current assets versus liabilities, signaling liquidity challenges and a strained balance sheet, warranting a below-average grade.

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2. Key Vital Signs:

Metric	Value (£)	Interpretation
Current Assets	7,146	Includes stock (£7,000) and cash (£146); very low cash reserve indicating limited immediate liquidity.
Current Liabilities	11,684	Obligations due within one year exceed current assets by £4,538, showing a liquidity shortfall.
Net Current Assets (Working Capital)	(4,538)	Negative working capital indicates the company may struggle to meet short-term liabilities promptly.
Shareholders' Funds (Equity)	(4,638)	Negative equity implies accumulated losses; the company is technically insolvent on a balance sheet basis.
Turnover	Not disclosed	Unable to assess revenue generation; absence of income statement limits full assessment.
Number of Employees	1	Micro enterprise size, likely limited operational scale.

Vital Signs Interpretation:

• The "heartbeat" of the company—its liquidity—is weak, with cash reserves nearly negligible and current liabilities exceeding assets.
• Negative shareholders’ equity is a critical symptom, indicating the company’s accumulated losses have eroded the capital base, a sign of financial distress.
• Stock levels represent the bulk of current assets, but these are less liquid and may not convert quickly into cash to meet obligations.

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3. Diagnosis:

Soteira Systems Ltd is in the early stages of its corporate life cycle, incorporated in December 2022 and filing its first set of accounts by the end of 2023. The financial data reveals:

• Symptoms of distress: Negative working capital and shareholders’ funds suggest the company has incurred losses or invested heavily without generating sufficient revenue or profit to date.
• Liquidity risk: Limited cash on hand combined with current liabilities exceeding current assets means the business may have difficulty paying suppliers, creditors, or managing day-to-day expenses without additional funding.
• Capital structure: Negative equity signals that liabilities outweigh assets, which is a serious concern for creditors and investors, risking solvency if the trend continues.
• Business scale: With only one employee and micro-size categorization, the company’s operational scale is minimal, which may limit its ability to generate significant turnover quickly.

Overall, the company appears to be in a fragile financial condition, akin to a patient with a weak pulse and signs of financial stress, requiring close monitoring and proactive management.

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4. Recommendations:

To improve the financial wellness of Soteira Systems Ltd, the following actions are advised:

1. Improve Liquidity Management:

   • Increase cash reserves by accelerating cash collections or securing short-term financing.
   • Consider negotiating extended payment terms with suppliers to ease immediate cash outflows.

2. Review Inventory Levels:

   • Assess stock for slow-moving or obsolete items that could be sold or written down to improve cash flow and reduce working capital tied up in inventory.

3. Capital Injection:

   • Infuse fresh equity capital or explore shareholder loans to restore positive net assets and improve the balance sheet health.

4. Revenue Enhancement:

   • Focus on sales growth strategies to boost turnover since the absence of income data suggests revenue generation is limited or not yet material.

5. Cost Control:

   • Monitor and reduce overhead costs rigorously to conserve cash in the early growth phase.

6. Regular Financial Monitoring:

   • Establish a monthly financial review process to track liquidity, cash flow, and expenses closely, allowing for early detection of worsening symptoms.

7. Professional Advice:

   • Engage with financial advisors or accountants to develop a robust financial plan and explore funding options.

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