SUTO LTD

Executive Summary

SUTO LTD currently displays a mixed financial health profile with positive short-term liquidity but negative equity indicating underlying financial stress. The company’s significant long-term debt and minimal capital base pose risks to sustainability, although stable fixed assets and working capital provide some resilience. Focused debt management, capital strengthening, and operational improvements are essential to secure a healthier financial future.

SUTO LTD - Analysis Report

Company Number: 13129756

Analysis Date: 2025-07-20 12:23 UTC

Financial Health Assessment of SUTO LTD

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1. Financial Health Score: C-

Explanation:
SUTO LTD's financial position reflects a borderline condition with some concerning signs of financial distress. The company exhibits negative net assets (shareholders' funds), indicating that liabilities exceed assets. However, it maintains a stable fixed asset base and positive working capital, which are positive signs. The micro-entity status and absence of employees suggest a lean operation but also limited operational scale. Overall, the company is currently solvent but under financial strain, hence a grade of C-.

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2. Key Vital Signs

Metric	Value (£)	Interpretation
Fixed Assets	230,918	Strong asset base mainly in property or long-term holdings, providing collateral strength.
Current Assets	7,203	Low liquid assets; limited cash or receivables to cover short-term needs.
Current Liabilities	1,735	Short-term obligations are relatively small compared to assets, indicating manageable immediate debts.
Net Current Assets (Working Capital)	5,468	Positive working capital suggests healthy short-term liquidity.
Creditors After One Year	243,600	Significant long-term debts or obligations, likely secured against fixed assets.
Net Assets (Shareholders' Funds)	-7,214	Negative equity, meaning total liabilities exceed total assets; a symptom of financial distress.
Share Capital	1.00	Minimal initial investment; company heavily reliant on external financing or retained earnings.
Employees	0	No staffing costs but also no operational workforce, indicating minimal business activity or outsourcing.

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3. Diagnosis

Symptom Analysis:

• The company shows a healthy cash flow symptom with positive net current assets, meaning it can meet short-term liabilities comfortably.
• However, the negative net assets indicate deeper financial weakness—a classic symptom of balance sheet stress—where the company's total liabilities surpass its total assets. This is often due to accumulated losses, high debt, or asset revaluations.
• The large long-term creditor balance (£243,600) suggests the company has significant debt, probably to finance its fixed assets. It may be servicing this debt but has not yet built sufficient equity.
• No employees imply minimal operational expenses but potentially limited business activity or outsourcing, potentially impacting revenue generation.
• The company's micro-entity status and recent incorporation (2021) indicate it is in the early stage of its business lifecycle, which can explain some financial fragility.

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4. Prognosis

If the company can maintain or improve its liquidity and cash flow, it may stabilize and eventually rebuild equity. However, the high long-term liabilities and negative net worth present risks. Without increasing profitability or capital injections, the company risks insolvency in the medium term. Active management of debt, improving operational efficiency, or asset restructuring would be critical to enhancing financial health.

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5. Recommendations

1. Debt Restructuring: Negotiate with creditors to restructure the long-term debt of £243,600 to reduce pressure on cash flow and potentially lower interest costs.
2. Capital Injection: Consider raising additional equity capital to restore positive net assets and improve solvency ratios. This could come from the current shareholder or new investors.
3. Operational Review: Explore opportunities to generate revenue or reduce costs further, despite no employees, through strategic partnerships or leasing management improvements.
4. Cash Flow Monitoring: Maintain a tight control on cash flow to ensure the positive working capital position is sustained or improved.
5. Asset Utilization: Assess whether fixed assets are generating returns or if some assets could be sold or leveraged better to improve liquidity.
6. Regular Financial Reporting: Continue timely filing and consider preparing management accounts more frequently than annually to detect early signs of distress.

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