SQAC LIMITED

Executive Summary

SQAC LIMITED is a micro private limited company showing fragile but positive financial health with a slim working capital margin and decreased equity. The company must enhance liquidity and strengthen its financial base to sustain operations and support growth. Proactive cash flow management and securing additional funding or grants will be critical to improving its financial wellness.

SQAC LIMITED - Analysis Report

Company Number: 13889983

Analysis Date: 2025-07-20 18:48 UTC

Financial Health Assessment Report for SQAC LIMITED

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1. Financial Health Score: C

Explanation:
SQAC LIMITED displays signs of financial functioning but with limited financial buffer and constrained liquidity. The company is maintaining positive net current assets, but the margin is very slim, indicating a fragile financial condition. Given its short trading history and small scale, this grade reflects cautious optimism tempered by the need for strengthening liquidity and improving retained earnings.

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2. Key Vital Signs

• Current Assets: £1,282 (2024) vs £1,118 (2023)
  Indicates a slight increase in short-term resources available to meet obligations.

• Cash Position: £1,182 (2024) vs £1,018 (2023)
  Healthy cash presence for a micro-sized company, showing some positive cash flow generation or capital injection.

• Debtors: £100 (steady)
  A small but consistent amount tied in receivables, manageable given company size.

• Current Liabilities: £1,211 (2024) vs £942 (2023)
  Noticeable increase in short-term obligations, which raises a red flag on liquidity pressure.

• Net Current Assets (Working Capital): £71 (2024) vs £176 (2023)
  A critical metric showing available working capital has reduced significantly, suggesting tightening liquidity.

• Shareholders' Funds (Equity): £71 (2024) vs £176 (2023)
  Decrease in net worth indicates accumulated losses or capital withdrawals, weakening the company’s financial base.

• Accounting Category: Total Exemption Full (small company regime)
  Indicates simpler reporting, typical for micro or small companies.

• Company Size & Operations: Incorporated 2022, micro private limited company with one employee (director), operating in research and experimental development (SIC 72190).

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3. Diagnosis

SQAC LIMITED is in the early stage of its life cycle, operating as a micro private limited company in the research and development sector. The company’s "vital signs" reveal a business with minimal financial resources but currently capable of meeting its short-term liabilities, albeit with a very thin margin of working capital (£71).

The shrinking net current assets and shareholders’ funds over the last year are symptoms of financial stress. This could be due to operational losses or increased liabilities without equivalent asset growth. The cash balance, although positive, is barely sufficient to cover immediate debts, indicating a "cash flow on a drip" status rather than robust liquidity.

The absence of an income statement (due to small company exemption) limits insight into profitability. However, the decrease in equity and net current assets strongly suggests the company is consuming resources faster than they are replenished, a symptom of early-stage or developmental phase businesses often relying on external funding or founder capital.

The director, Dr. Hemant Jashbhai Desai, holds significant control, which affords centralized decision-making but also concentrates risk. The company appears compliant with filing deadlines and has no overdue accounts, which is a positive sign of administrative health.

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4. Recommendations

• Build Liquidity Buffer:
  To avoid distress from sudden cash demands, the company should prioritize increasing its cash reserves or securing a short-term credit facility. This will help smooth operational cash flow fluctuations.

• Strengthen Working Capital Management:
  Careful monitoring and management of creditors and debtors to optimize cash inflows and outflows. Negotiate better payment terms with suppliers and encourage quicker debtor payments.

• Improve Profitability / Capital Injection:
  Since the company is currently showing signs of equity reduction, focus on increasing revenue or securing additional equity investment to shore up the balance sheet.

• Detailed Financial Planning:
  Prepare and review monthly cash flow forecasts and budgets to anticipate funding requirements early and plan for growth sustainably.

• Explore Grants and R&D Incentives:
  Given the business sector (research and experimental development), seek government grants, R&D tax credits, or innovation funding to supplement income without diluting equity.

• Regular Financial Review:
  Even as a small entity, conduct periodic financial health checks and seek professional advice to identify and address emerging risks proactively.

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Medical Analogy Summary:
SQAC LIMITED’s financial health is akin to a patient showing early symptoms of fatigue and mild dehydration — the vital signs are just stable enough to continue functioning but require immediate nutritional support and hydration (capital and cash flow improvement) to avoid progression to critical illness (insolvency). The company is in a delicate state and would benefit from proactive interventions to restore vitality.

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