SPARKER LIGHTING LTD

Executive Summary

Sparker Lighting Ltd demonstrates solid financial health with positive net assets and liquidity in its first year. The company is compliant and solvent but should focus on building capital reserves and closely managing cash flow to sustain growth in the cyclical motion picture industry.

SPARKER LIGHTING LTD - Analysis Report

Company Number: 14803568

Analysis Date: 2025-07-20 19:14 UTC

Financial Health Assessment: Sparker Lighting Ltd

---

1. Financial Health Score: B

Explanation:
Sparker Lighting Ltd is a newly incorporated private limited company (April 2023) in the motion picture production industry. The company shows a solid financial footing for its first reporting period ending April 2024. It has healthy net current assets and positive shareholders' funds, indicating good initial capitalisation and liquidity. However, as a start-up with limited operating history and low share capital (£3.00), there is insufficient data on profitability trends and cash flow sustainability to warrant an A grade. The company is currently free from overdue filings and legal distress, which supports a positive outlook.

---

2. Key Vital Signs

Vital Sign	Figure (£)	Interpretation
Current Assets	17,459	Includes £15,039 cash and £2,420 debtors; indicates liquidity to cover short-term obligations.
Current Liabilities	8,729	Debts due within one year, including taxes and director loans; manageable relative to assets.
Net Current Assets	8,730	Positive working capital ("healthy cash flow reservoir") supports short-term operational needs.
Net Assets	8,730	Reflects total equity; positive net asset position shows company is solvent at balance sheet date.
Share Capital	3.00	Minimal share capital; typical for a start-up but low capital buffer.
Profit and Loss Reserve	8,728	Accumulated retained earnings; suggests some earnings or capital injections beyond share capital.
Employee Count	1 (Director)	Small scale operation; likely low fixed overhead costs.
Filing Status	Up to date	No overdue accounts or confirmation statements; good compliance health.

---

3. Diagnosis: Financial Condition Summary

• Liquidity & Solvency: The company exhibits a "healthy cash flow" position with net current assets of £8,730, meaning it has more liquid assets than short-term liabilities. This suggests the company can meet immediate financial obligations without strain, a critical sign of financial wellness.

• Capital Structure: With only £3 in share capital but £8,728 in profit and loss reserves, the company appears to have received funds either through retained earnings or director loans, underpinning its equity base. The director loans appear as part of current liabilities but do not undermine solvency.

• Operating Scale & Risk: Being a micro/small-sized entity with just one employee (the director), the company operates with limited overhead, reducing fixed cost "symptoms of distress." However, the small scale means it may be vulnerable to market or operational shocks without a broader capital base.

• Compliance & Governance: Timely financial filings and active status indicate good governance and no regulatory red flags.

• Business Activity: Operating in motion picture production (SIC 59111), the company is likely to face cyclical revenue and cash flow patterns tied to project work. Early financials do not disclose turnover or profitability details, so assessing operational profitability requires monitoring future accounts.

---

4. Recommendations: Path to Improved Financial Wellness

• Build Capital Buffer: Consider increasing share capital or securing additional equity investment to strengthen the company's capital base and reduce reliance on director loans. This will improve financial resilience ("strengthen the heart muscle").

• Monitor Cash Flow Closely: As motion picture production can be project-driven with variable cash flows, implement rigorous cash flow forecasting and maintain liquidity reserves to manage timing gaps ("avoid symptoms of cash flow fatigue").

• Develop Profitability Tracking: Establish detailed management accounts to monitor income and expenses regularly. This will help detect early signs of operational stress or opportunities for margin improvement.

• Expand Financial Reporting: As the company grows, consider moving beyond the small companies regime to provide fuller financial disclosures. This enhances stakeholder confidence and aids in securing financing.

• Maintain Compliance Vigilance: Continue timely filings and board oversight to prevent regulatory "fevers" that could impair operational capacity.

• Strategic Planning: Given the niche industry, create a strategic roadmap for growth and diversification to reduce dependence on single projects and stabilize earnings.

---

Summary: Sparker Lighting Ltd's financial "vital signs" indicate a company in good initial health with positive liquidity and net asset position for its first year. While early-stage and small in scale, it shows no symptoms of financial distress. Strengthening capital and monitoring cash flow will be key to ensuring a robust prognosis as the company matures.