SUPPORTING CHILDREN LTD

Executive Summary

SUPPORTING CHILDREN LTD is currently experiencing severe liquidity and solvency issues, with significantly negative working capital and shareholders’ funds. The company’s financial health score is D, reflecting urgent need for cash flow management, cost control, and potential capital injection to avoid insolvency. Prompt action to stabilize finances and improve operational efficiency is critical to recovery.

SUPPORTING CHILDREN LTD - Analysis Report

Company Number: 13257722

Analysis Date: 2025-07-20 16:58 UTC

Financial Health Assessment for SUPPORTING CHILDREN LTD

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1. Financial Health Score: D

Explanation:
The company is currently showing significant signs of financial distress. The net liabilities position and sharply increased current liabilities compared to current assets are symptoms of severe liquidity strain. While the company has some fixed assets, the working capital is deeply negative, indicating an unhealthy cash flow position and risk of insolvency without corrective action.

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2. Key Vital Signs

Metric	2024 Value (£)	Interpretation
Fixed Assets	1,042	Small asset base, slightly increased due to investment in computer equipment.
Current Assets	44	Extremely low; cash or receivables are minimal.
Current Liabilities	3,746	Substantially high, more than 85x current assets, indicating severe short-term debt pressure.
Net Current Assets (Working Capital)	-3,702	Negative working capital; company cannot cover short-term debts with short-term assets.
Total Assets Less Current Liabilities	-2,660	Negative net asset position, showing liabilities exceed assets.
Net Assets (Shareholders’ Funds)	-2,660	Negative equity suggests accumulated losses or debts exceeding assets.
Share Capital	1	Nominal share capital, minimal equity cushion.
Employees	1	Very small operation, likely sole director or owner-operated.

Trend:

• From 2023 to 2024, current liabilities increased dramatically (from £1,018 to £3,746), while current assets only marginally improved (£21 to £44), worsening liquidity.
• Net assets deteriorated from -£744 to -£2,660, showing deepening financial distress.
• Fixed assets increased due to capital expenditure on computer equipment, but this does not offset heavy liabilities.

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3. Diagnosis: Financial Condition and Symptoms Analysis

• Liquidity Crisis: The company has a “symptom” of acute liquidity distress. Current liabilities far exceed current assets, leading to a negative working capital of £3,702. This means the company lacks the immediate resources to pay its short-term debts, a critical sign of financial illness akin to a patient with dangerously low blood pressure.
• Negative Equity: The shareholder’s funds are deeply negative, indicating accumulated losses or liabilities have eroded the company’s net worth. This is a symptom of chronic financial illness and raises concerns about the company’s solvency.
• Asset Base: The company has a minimal fixed asset base which has increased slightly due to recent investment in computer equipment. While fixed assets provide some stability, they are insufficient to cover liabilities.
• Operating Scale: With only one employee (likely the director), the business operation is very small, which could limit revenue generation and financial resilience.
• No Audit Requirement: The company qualifies as a micro-entity and has not undergone an audit, so detailed financial scrutiny is limited. This is typical for small companies but warrants careful internal financial management.
• No Overdue Filings: The company is compliant with filing deadlines, which shows administrative diligence despite financial difficulties.

Overall, SUPPORTING CHILDREN LTD shows symptoms of severe financial stress, particularly in liquidity and solvency, which, if untreated, might lead to insolvency or forced restructuring.

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4. Recommendations: Steps to Improve Financial Wellness

1. Immediate Cash Flow Management:

   • Conduct a thorough cash flow forecast to identify upcoming cash shortfalls.
   • Prioritise payment of critical short-term liabilities and negotiate extended payment terms with creditors.
   • Explore options for short-term financing or working capital loans to stabilize cash flow.

2. Cost Control and Revenue Growth:

   • Review operating expenses to identify and eliminate non-essential costs.
   • Consider strategies to increase sales or diversify income streams within the educational support services sector.

3. Capital Injection:

   • Consider injecting additional equity capital or seeking external investment to bolster shareholders’ funds and improve solvency.
   • Alternatively, explore grants or support schemes available for educational and social enterprises.

4. Debt Restructuring:

   • Engage with creditors to negotiate repayment plans or restructuring to reduce immediate liquidity pressure.
   • If liabilities are unsustainable, seek advice on formal insolvency procedures to protect the company and stakeholders.

5. Monitoring and Reporting:

   • Implement regular financial health monitoring akin to routine medical check-ups, focusing on liquidity ratios and net asset position.
   • Seek professional advice to prepare more detailed financial statements and forecasts, even if not mandatory.

6. Operational Review:

   • Assess whether the current business model and scale are sustainable given the financial strain.
   • Consider strategic pivots or partnerships to improve operational efficiency and market presence.

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Executive Summary