SWATKPK LIMITED

Executive Summary

SWATKPK LIMITED exhibits fundamental financial stability with positive working capital and net assets, but the recent decline in asset base and equity flags early concerns about financial resilience. Strengthening cash flow management, controlling costs, and strategic reinvestment are essential to bolster financial health and sustain growth. Careful monitoring and proactive measures will help avert further deterioration and support a healthier financial future.

SWATKPK LIMITED - Analysis Report

Company Number: 14328835

Analysis Date: 2025-07-29 18:25 UTC

Financial Health Assessment: SWATKPK LIMITED

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1. Financial Health Score: C

Explanation:
SWATKPK LIMITED demonstrates a stable but modest financial position typical of a micro-entity in its early years. While the company maintains positive net assets and working capital, there is a noticeable decline in asset base and net assets year-over-year, signaling early symptoms of financial contraction. The score "C" reflects adequate but cautious health, with room for improvement in asset management and growth sustainability.

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2. Key Vital Signs

Metric	2024 (£)	2023 (£)	Interpretation
Fixed Assets	2,961	3,948	Slight reduction in long-term assets may indicate asset disposal or depreciation.
Current Assets	7,384	10,618	Decreasing liquid and short-term assets could reduce the company’s ability to cover short-term obligations comfortably.
Current Liabilities	2,722	3,899	Lower current liabilities reduce short-term debt pressure, a positive sign.
Net Current Assets (Working Capital)	4,662	6,719	Healthy positive working capital, but downward trend suggests tightening liquidity.
Total Assets Less Current Liabilities	7,623	10,667	Shrinking asset base after liabilities; indicates shrinking resource buffer.
Net Assets (Equity)	7,023	10,067	Declining net assets imply reduced shareholder equity and potential erosion of financial strength.
Average Number of Employees	2	1	Business is expanding its workforce, which may signal growth intentions.

Interpretation:

• The company maintains a "healthy cash flow" in terms of positive working capital, but the decline in current and fixed assets alongside net assets signals "symptoms of distress" such as shrinking resources or underinvestment.
• The decrease in net assets is a red flag that requires diagnostic attention to underlying causes like losses, asset sales, or increased expenses.

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3. Diagnosis

SWATKPK LIMITED is functioning within the expected parameters of a micro-entity in its infancy. The company shows positive net assets and liquidity, which are good vital signs indicating it can meet short-term obligations and has some buffer for operations. However, the decline in fixed and current assets coupled with falling net assets signals potential early-stage financial stress.

Possible underlying causes include:

• Use of cash reserves for operational expenses or investment without immediate revenue offset.
• Asset disposals or depreciation reducing fixed assets.
• Cost pressures or lower turnover impacting retained earnings and equity.

The increase in employee headcount suggests the company is investing in growth, but this must be balanced against resource depletion. The company's financial "immune system" shows resilience but needs careful monitoring to avoid worsening liquidity or solvency issues.

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4. Recommendations

To improve financial wellness and strengthen the company’s financial health, consider the following actions:

1. Enhance Cash Flow Management:

   • Monitor receivables and payables closely to maintain or increase net current assets.
   • Avoid unnecessary asset disposals unless strategically justified.

2. Cost Control and Profitability:

   • Review operating expenses to identify and manage cost drivers.
   • Focus on improving margins to rebuild equity and net assets.

3. Asset Investment Strategy:

   • Consider reinvestment in fixed assets to support operational capacity if aligned with growth plans.
   • Avoid underinvestment that might impair long-term competitiveness.

4. Financial Forecasting and Early Warning Systems:

   • Implement regular financial forecasts to anticipate liquidity needs and capital requirements.
   • Set up key performance indicators (KPIs) to detect early financial distress signals.

5. Stakeholder Communication:

   • Keep shareholders and lenders informed about financial position and strategies to maintain confidence.

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