SPANISH CLEAN LTD

Executive Summary

SPANISH CLEAN LTD shows a solid financial foundation for a newly incorporated company, with positive profitability and healthy working capital indicating good operational control. The company should focus on strengthening cash reserves, managing costs, and gradually reducing liabilities to ensure sustained financial wellness as it grows.

SPANISH CLEAN LTD - Analysis Report

Company Number: 14837332

Analysis Date: 2025-07-29 16:06 UTC

Financial Health Assessment for SPANISH CLEAN LTD

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1. Financial Health Score: B

Explanation:
SPANISH CLEAN LTD demonstrates a sound initial financial footing in its first 13-month period, with positive profitability, healthy net current assets, and a robust equity base relative to its size. While the company is small and in its infancy, the financial "vital signs" suggest a “stable” condition with manageable liabilities and a positive working capital position. Some caution is warranted due to limited scale and early stage, but overall the financial health is good for a startup.

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2. Key Vital Signs

Metric	Value (£)	Interpretation
Turnover (Revenue)	71,622	Modest sales volume consistent with a micro/small business.
Gross Profit	35,684	Healthy gross margin (~50%), indicating effective cost control.
Operating Profit	1,466	Positive operating profit, though slim margin (~2%), shows early-stage cautious profitability.
Net Current Assets	1,686	Positive working capital indicates good short-term liquidity and ability to cover immediate obligations.
Cash Balance	773	Adequate cash reserves for immediate needs but could be improved for buffer.
Debtors	913	Some funds tied up in receivables; normal for trading but watch collection periods.
Creditors > 1 Year	710	Long-term liabilities present but modest relative to assets.
Net Assets / Equity	1,465	Positive shareholder funds demonstrate net positive financial position.

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3. Diagnosis: What the Financial Data Reveals

SPANISH CLEAN LTD’s financial “vital signs” reveal a company in its early developmental phase with a generally healthy balance sheet and cautious profitability. The business is generating a gross profit that indicates pricing and cost of goods are aligned well, which is a positive symptom of operational efficiency.

The slim operating profit margin is typical for a new company reinvesting in its establishment phase or incurring administrative overheads. The positive net current assets suggest the company is not overextended and has sufficient short-term liquidity—a “healthy cash flow” symptom.

The presence of long-term creditors amounting to £710 implies some external financing or deferred liabilities, which are manageable given the company’s asset base. The positive shareholders’ funds indicate that the owner’s equity is intact without signs of distress.

However, the company’s size and scale are small, and the cash buffer is modest—indicating a need for prudent cash flow management. The single director and sole shareholder structure means governance and decision-making are concentrated, which can be agile but also carries concentration risk.

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4. Recommendations: Specific Actions to Improve Financial Wellness

• Enhance Cash Reserves: Aim to build a larger cash buffer to withstand unexpected expenses or seasonal fluctuations. Consider managing debtor collection terms to accelerate cash inflows.

• Tighten Cost Control: Monitor administrative expenses closely to improve operating margins. As the business scales, economies of scale may improve profitability.

• Debt Management: Plan to reduce long-term creditors systematically to improve financial flexibility and reduce interest or repayment burden.

• Sales Growth Strategies: Explore marketing or sales initiatives to increase turnover while maintaining gross margin. Diversification of sales channels could stabilize revenue streams.

• Financial Planning: Implement regular budgeting and cash flow forecasting to anticipate liquidity needs and avoid surprises.

• Governance and Risk: Although currently single director, consider advisory support or external consultation to enhance strategic oversight and reduce concentration risk.

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