SSOE LIMITED
Executive Summary
SSOE Limited demonstrates a healthy financial position for a micro-entity, with strong growth in net assets and working capital indicating good liquidity and operational stability. The company’s financial health is robust, though rising current liabilities require monitoring. Continued focus on cash flow management and cost control will support sustainable growth in the competitive hospitality industry.
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This analysis is opinion only and should not be interpreted as financial advice.
SSOE LIMITED - Analysis Report
Financial Health Assessment of SSOE LIMITED
1. Financial Health Score: B
Explanation:
SSOE Limited demonstrates a solid financial footing for a micro-entity in its early years of operation. The company shows consistent growth in net assets and working capital, indicating improving financial stability. While the scale is small, the positive trend in liquidity and equity supports a "B" grade, reflecting a financially sound but still developing business with room for further strengthening.
2. Key Vital Signs
Metric | 2023 Value | 2022 Value | Interpretation |
---|---|---|---|
Fixed Assets | £1,061 | £767 | Slight increase; investment in long-term assets is minimal but positive. |
Current Assets | £9,825 | £4,324 | Significant increase in liquid assets; indicates improved cash availability or receivables. |
Current Liabilities | £5,942 | £3,752 | Increase in short-term debts; manageable given asset growth but requires monitoring. |
Net Current Assets (Working Capital) | £3,883 | £572 | Healthy increase; positive working capital signals good short-term financial health and operational liquidity. |
Net Assets (Equity) | £4,944 | £1,339 | Strong growth in net assets; reflects retained earnings and capital injections strengthening the balance sheet. |
Average Number of Employees | 7 | 5 | Growth in workforce; suggests business expansion and increased operational capacity. |
Interpretation:
- Healthy cash flow position: The net current assets have grown substantially, indicating the company can comfortably meet its short-term obligations—a vital sign of liquidity health.
- Increasing equity base: Rising net assets and shareholders’ funds show the company is building financial reserves, reducing reliance on external debt.
- Asset growth: Modest increase in fixed assets consistent with a micro business investing cautiously in its infrastructure.
- Rising liabilities: Current liabilities have increased but are well covered by current assets, so there is no immediate distress signal. However, this warrants regular review to avoid liquidity crunches.
- Workforce expansion: The increase in staff count is a positive symptom of business growth but also suggests increased fixed costs.
3. Diagnosis
SSOE Limited exhibits signs of robust financial health for a micro-sized entity in the hospitality sector (public houses and bars). The company is showing clear improvement in liquidity and equity, indicating strong internal cash management and profitability retained within the business. The working capital increase is a particularly encouraging symptom, suggesting that the company has a healthy operating cycle and is not overly stretched on short-term obligations.
The rising current liabilities, although currently well covered, should be monitored carefully to prevent future liquidity issues. The company’s small fixed asset base is typical for its size and industry, not a cause for concern. The expanding workforce aligns with growth strategies but brings operational cost pressures that need to be managed to maintain profitability.
Overall, the financial "pulse" of SSOE Limited is strong, with no immediate symptoms of distress or financial weakness. The company is in a stable and growing phase, with a balance sheet showing resilience and positive momentum.
4. Recommendations
Maintain Working Capital Vigilance:
Continue to monitor current liabilities closely, ensuring they do not grow faster than current assets. Implement cash flow forecasting to anticipate any short-term funding needs.Enhance Profitability Tracking:
Although not disclosed here, ensure the profit and loss accounts are regularly reviewed to maintain healthy margins, especially given industry volatility in hospitality.Plan for Asset Investment:
Consider strategic investments in fixed assets or technology that improve operational efficiency and customer experience, while maintaining a conservative approach aligned with cash flow.Cost Management with Growth:
With an increasing number of employees, implement effective cost control and productivity measures to safeguard profitability as the business scales.Prepare for Contingencies:
Build a cash reserve or access to a credit facility to buffer against unforeseen industry shocks or seasonal downturns typical in the public house sector.Compliance and Reporting:
Continue timely filing of accounts and confirmation statements to avoid penalties and maintain good standing with regulatory authorities.
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