STRONG 2020 LTD

Executive Summary

STRONG 2020 LTD currently faces financial health challenges marked by negative net assets and working capital deficits, indicating liquidity and solvency pressure. Though generating modest profits, the company’s balance sheet weakness requires urgent attention to debt restructuring and cash flow management. Focused cost control and potential equity support are essential to restore financial stability and support future growth.

STRONG 2020 LTD - Analysis Report

Company Number: 12400750

Analysis Date: 2025-07-20 13:49 UTC

Financial Health Assessment for STRONG 2020 LTD
Assessment Date: Financial year ended 31 March 2025

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1. Financial Health Score: D

Explanation:
STRONG 2020 LTD exhibits clear symptoms of financial distress, with persistent negative net assets and deteriorating liquidity. While the company remains active and generates turnover, its balance sheet reveals a fragile financial condition. The negative shareholders’ funds and net current liabilities indicate ongoing solvency risks, warranting a grade of D, reflecting below-average financial health and the necessity for prompt remedial action.

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2. Key Vital Signs

Metric	2025 Value (£)	Interpretation
Turnover	38,934	Stable but low revenue for the business size
Net Current Assets	-1,985	Negative working capital; “unhealthy cash flow”
Total Net Assets (Shareholders’ Funds)	-8,365	Negative equity; “symptom of balance sheet distress”
Creditors due within 1 year	6,330	Short-term obligations higher than current assets
Creditors due after 1 year	9,500	Significant long-term debt burden
Profit for the Period	8,168	Positive operating profit but overshadowed by liabilities
Average number of employees	2	Small workforce consistent with micro entity

Interpretation of Vital Signs:

• Negative Net Current Assets: The company’s current liabilities exceed current assets, indicating difficulty in meeting short-term obligations with available liquid assets. This is a critical “vital sign” of financial strain, suggesting potential cash flow issues.
• Negative Shareholders’ Funds: The company’s liabilities exceed its assets by £8,365, a clear symptom of balance sheet weakness and potential insolvency risk if not addressed.
• Stable Turnover but No Growth: Turnover remains relatively stable but at a low level, limiting the company’s ability to improve financial health through increased sales.
• Profitability Exists but Limited Cushion: The company reports a modest profit, which is a positive sign, but profits are insufficient to offset the accumulated deficits and improve net asset position.
• Debt Structure: The mix of short-term and long-term creditors implies ongoing obligations that the company must manage carefully to avoid default.

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3. Diagnosis

Underlying Health Condition:
STRONG 2020 LTD is experiencing chronic financial stress characterized by negative equity and working capital deficits. The company’s “financial pulse” is weak due to persistent net current liabilities and an overall negative net asset position. Despite generating consistent revenues and modest profits, the company has accumulated losses from prior periods or possibly has significant intangible or off-balance sheet liabilities not captured here.

The “symptoms” observed — negative shareholders’ funds and working capital deficits — suggest that the company may be relying on external financing or director loans to sustain operations. The presence of long-term creditors indicates some financing arrangements that may pose future liquidity risks. The company’s small scale and limited turnover constrain its ability to absorb shocks or invest in growth.

The positive earnings in the latest year are encouraging but insufficient to restore balance sheet health without structural changes.

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4. Recommendations

To improve its financial wellness and stabilize the company’s health, STRONG 2020 LTD should consider the following actions:

1. Strengthen Cash Flow Management:

   • Enhance collection processes to improve current assets (cash and receivables).
   • Negotiate extended payment terms with creditors to ease short-term cash flow strain.

2. Reduce Debt Burden:

   • Explore restructuring or refinancing options for long-term creditors to reduce interest and extend maturities.
   • Consider equity injection from shareholders or new investors to improve net assets.

3. Cost Control and Profit Improvement:

   • Review operating costs, particularly staff and other charges, to identify savings without compromising service quality.
   • Investigate opportunities to increase turnover through marketing or service diversification.

4. Regular Financial Monitoring:

   • Implement monthly financial reviews focusing on working capital trends and profitability metrics.
   • Use cash flow forecasting to anticipate liquidity needs and avoid surprises.

5. Seek Professional Advice:

   • Engage with financial advisors or turnaround specialists to formulate a sustainable business plan and debt management strategy.

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