T & S WHOLESALE LTD

Executive Summary

T & S WHOLESALE LTD, a recently formed micro-entity, shows a fragile financial condition characterized by negative working capital and high leverage. While the company is solvent with modest positive equity, the financial structure suggests potential liquidity challenges ahead. Immediate focus on improving cash flow management and restructuring liabilities is recommended to strengthen financial resilience and support sustainable growth.

T & S WHOLESALE LTD - Analysis Report

Company Number: NI702108

Analysis Date: 2025-07-20 19:14 UTC

Financial Health Assessment Report for T & S WHOLESALE LTD
Assessment Date: Post 30 September 2024 Financial Year End

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1. Financial Health Score: C (Fair)

Explanation:
The company is a newly incorporated micro-entity with limited financial history and modest asset base. The balance sheet shows a positive net asset position but a concerning structure of liabilities, indicating mild financial strain. Overall, the financial condition is stable but with symptoms that warrant close monitoring and improvement.

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2. Key Vital Signs (Core Financial Metrics)

Metric	Value (£)	Interpretation
Fixed Assets	54,500	Reasonable investment in long-term assets for a start-up.
Current Assets	14,294	Low level of liquid and short-term assets.
Current Liabilities	16,517	Short-term debts exceed current assets, causing net current liabilities of £2,223 (negative working capital). This is a symptom of liquidity pressure.
Net Current Assets (Working Capital)	-2,223	Negative working capital suggests potential cash flow challenges to meet short-term obligations.
Creditors after one year	48,401	Significant long-term liabilities compared to assets, a red flag for solvency risk.
Net Assets (Shareholders' Funds)	3,876	Small positive equity buffer, but thin and vulnerable.
Employees	1	Minimal personnel expense; low overhead.

Additional Notes:

• The company holds a significant amount of long-term debt (£48,401) relative to its asset base (£54,500 fixed assets).
• The net assets of £3,876 show a very slim margin of solvency.
• The company is classified as a micro-entity, so the scale is small, but the debt structure is a symptom of financial distress.

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3. Diagnosis: What the Financial Data Reveals About Business Health

• Vital Signs Interpretation:
  The company’s financial "pulse" shows it is in a delicate state. The "healthy cash flow" typically reflected by positive working capital is absent, indicating the company may struggle to cover immediate financial obligations—a classic "symptom of distress."

• Balance Sheet Analysis:
  The long-term liabilities almost match fixed assets, suggesting the company’s investments are largely financed through debt rather than equity. This "high leverage" can be risky, especially for a young entity without established cash flows or profitability history.

• Equity Position:
  The shareholders’ funds are positive but minimal, implying limited financial "reserves" to absorb shocks or losses.

• Operational Scale:
  With only one employee and a recent incorporation date, the business is in its infancy, possibly still in an investment or setup phase rather than generating substantial revenue or profit.

• Liquidity and Solvency Concern:
  Negative working capital and significant long-term liabilities indicate potential liquidity crunches and solvency risks if revenue growth or cash generation does not improve swiftly.

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4. Recommendations: Specific Actions to Improve Financial Wellness

Short-Term Actions:

• Improve Working Capital Management:
  • Aim to increase current assets (cash, receivables) or reduce current liabilities.
  • Negotiate longer payment terms with suppliers or accelerate customer receivables.
• Cash Flow Forecasting:
  • Implement rigorous cash flow planning to anticipate and mitigate liquidity gaps.

Medium-Term Strategies:

• Debt Restructuring:

  • Explore refinancing options to reduce interest burden or extend repayment terms on long-term liabilities.
  • Consider converting some debt to equity if feasible to strengthen the balance sheet.

• Grow Revenue Base:

  • Focus on sales growth in core retail activities to generate sustainable profits and cash inflows.
  • Control operational costs prudently to improve profitability.

• Equity Injection:

  • Owner or investors could consider injecting additional capital to create a stronger equity buffer against financial shocks.

Long-Term Considerations:

• Monitor financial ratios regularly to detect early warning signs of distress.
• As the company matures, consider expanding financial reporting and governance practices beyond micro-entity requirements to enhance transparency and control.

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