SOUTHSIDE PERFORMANCE STUDIO LTD

Executive Summary

Southside Performance Studio Ltd shows signs of a stable but modest financial condition with positive operating profit and improving cash reserves, indicating a healthy short-term cash flow. However, the very low equity base and absence of fixed assets suggest limited financial depth, which could hinder long-term growth. Focused efforts on building retained earnings, managing costs, and investing in assets will be key to strengthening financial resilience.

SOUTHSIDE PERFORMANCE STUDIO LTD - Analysis Report

Company Number: SC678867

Analysis Date: 2025-07-29 20:23 UTC

Financial Health Assessment Report for SOUTHSIDE PERFORMANCE STUDIO LTD

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1. Financial Health Score: C

Explanation:
The company demonstrates a stable but very modest financial position typical of a small start-up or micro-enterprise in its early years. It has a positive operating profit and increasing cash balances, which are healthy signs; however, the minimal net asset base and absence of fixed assets indicate limited financial depth and potential vulnerability to unexpected costs or downturns. Overall, the score reflects a cautious optimism with room for strengthening.

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2. Key Vital Signs

Metric	Value (2024)	Interpretation
Operating Profit	£2,729	Positive operating profit suggests the business is generating surplus from core activities.
Gross Profit	£55,314	Reasonable gross income relative to expenses indicates viable revenue generation.
Administrative Expenses	£52,585	Costs are high but controlled relative to gross profit, reflecting tight management.
Cash at Bank	£4,000	Cash position has improved significantly from prior years, indicating healthier liquidity.
Net Current Assets	£4,000	Positive working capital ("healthy cash flow") providing ability to meet short-term liabilities.
Net Assets / Shareholders’ Funds	£2	Minimal equity base, showing very low retained earnings or asset accumulation.
Employees	0	No employees recorded, likely owner-operated or freelance-based, limiting fixed overhead risk.

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3. Diagnosis: Financial Health Overview

Strengths (Symptoms of Wellness):

• The company has achieved a modest operating profit in 2024, which is a positive sign of business viability in performing arts training.
• Cash reserves have grown from £900 to £4,000 over the past year, indicating improved liquidity and better short-term financial stability.
• The company maintains positive net current assets, ensuring it can cover immediate liabilities without strain.
• Directors have maintained consistent control and have not indicated any financial distress or overdue filings.

Weaknesses (Symptoms of Financial Stress):

• The net asset base is minimal (£2), showing the company has not yet built equity or retained earnings beyond the initial share capital, which might limit borrowing capacity or investment in growth.
• Absence of fixed assets suggests no tangible long-term investments, which may hinder scalability or collateral options.
• Administrative expenses are high relative to net profit, leaving a thin margin that could be vulnerable to changes in revenue or increased costs.
• No employees might reflect limited operational capacity and dependence on directors or freelancers, which could impact growth or service delivery scalability.

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4. Prognosis: Future Financial Outlook

If current trends continue, the company appears capable of maintaining its operating profitability and liquidity in the short term. However, its financial "immune system" is fragile due to the low equity and lack of fixed asset investment. To ensure longevity and improved resilience, the company will need to focus on expanding its profit margins, building retained earnings, and possibly investing in assets that can support business growth or diversification.

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5. Recommendations: Steps to Improve Financial Wellness

1. Build Equity and Retained Earnings:
   Consider strategies to increase profitability or reinvest profits to grow the net asset base. This will strengthen the company’s financial "heart" and support future borrowing or investment.

2. Cost Management:
   Review administrative expenses carefully to identify potential efficiencies or cost reductions without compromising service quality.

3. Asset Investment:
   Explore opportunities to acquire fixed assets or intellectual property that could enhance service offerings, improve operational efficiency, or serve as collateral for financing.

4. Revenue Diversification:
   Expand product or service lines within performing arts to reduce reliance on single income streams, mitigating revenue risks.

5. Human Resources Planning:
   Evaluate the possibility of hiring or contracting additional staff to increase operational capacity, reducing dependence on directors and enabling growth.

6. Cash Flow Monitoring:
   Maintain close monitoring of cash flow to ensure liquidity remains "healthy" and anticipate any upcoming financial obligations.

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