TESTING SYSTEMS UK LIMITED

Executive Summary

TESTING SYSTEMS UK LIMITED demonstrates a stable but financially constrained position with a significantly reduced asset base and equity over recent years. While liquidity remains positive, the thin working capital margin and erosion of net assets indicate caution. Strengthening cash flow management, rebuilding capital, and improving profitability are key to ensuring healthier financial resilience going forward.

TESTING SYSTEMS UK LIMITED - Analysis Report

Company Number: 12997416

Analysis Date: 2025-07-20 14:38 UTC

Financial Health Assessment of TESTING SYSTEMS UK LIMITED

---

1. Financial Health Score: C

Explanation:
The company shows stable but modest net assets and working capital, which suggests a generally stable financial condition for a micro-entity. However, the drastic decline in current assets and net assets over recent years, coupled with minimal fixed assets and limited share capital, signals some underlying financial constraints. The liquidity position is positive but thin, indicating the company’s cash flow and short-term obligations are balanced but with limited buffer. Overall, the business is not in immediate distress but shows symptoms of financial strain that require careful monitoring and improvement.

---

2. Key Vital Signs: Critical Metrics and Interpretation

Metric	Latest Value (2024)	Interpretation
Fixed Assets	£760	Very low long-term asset base, typical for a micro entity, limited investment in capital assets.
Current Assets	£8,626	Significant drop from previous years (£70k+), indicates reduced cash or receivables. Possible cash flow tightening.
Current Liabilities	£7,030	Short-term debts have also decreased significantly but remain close to current assets, indicating tight liquidity.
Net Current Assets (Working Capital)	£1,596	Positive but slim margin, shows the company can cover its short-term liabilities but with limited cushion.
Net Assets / Shareholders Funds	£1,156	Very low equity base, reduced drastically from £12,325 in 2020, indicating erosion of retained earnings or capital.
Share Capital	£100	Minimal paid-in capital, standard for small companies, but low capital buffer.
Employee Count	2	Small workforce consistent with micro entity status.

---

3. Diagnosis: Financial Condition Insights

• Symptoms of Financial Contraction: The sharp decline in current assets from over £70k in 2022 and 2023 to just £8.6k in 2024 signals a significant reduction in cash or receivables. This could indicate either a drop in business activity, collection issues, or asset disposals.
• Tight Liquidity: Current liabilities remain relatively close to current assets, showing a thin working capital margin. This means the company has a "healthy cash flow" but limited flexibility to absorb financial shocks or unexpected costs.
• Erosion of Equity: Net assets have fallen from £12,325 in 2020 to £1,156 in 2024, a concerning trend showing accumulated losses or capital withdrawals. This "symptom of distress" suggests profitability challenges or dividend payments exceeding retained profits.
• Stable Fixed Assets: Minimal changes in fixed assets imply little investment in growth or expansion, which could be strategic conservatism or lack of funds.
• Governance Stability: The company has maintained an active status with regular filings and no overdue reports, suggesting compliance health is good. The presence of a significant controlling shareholder (Mr. David Coniam) implies clear decision-making authority.

---

4. Recommendations: Actions to Improve Financial Wellness

• Enhance Cash Flow Management: Focus on improving receivables collection and managing payables to avoid liquidity crunches. Consider cash flow forecasting to anticipate shortfalls.
• Strengthen Capital Base: Explore options for increasing share capital or retaining more earnings to rebuild equity and provide a financial buffer against downturns.
• Cost Control and Profitability: Review cost structures and operational efficiency to improve margins. Investigate the reasons behind the drop in current assets and take corrective actions.
• Strategic Investment: Assess opportunities for modest fixed asset investments that could support business growth or operational improvements, balancing risk and return.
• Regular Financial Monitoring: Establish monthly or quarterly financial reviews to detect early signs of distress and adjust business strategies proactively.
• Engage Professional Advice: Consider consulting with financial advisors or accountants specializing in micro entities to optimize tax, filing, and financial strategies.

---