THAT'S SEW TERRY FOX! LTD

Executive Summary

THAT'S SEW TERRY FOX! LTD maintains solvency but faces liquidity pressures reflected in declining net assets, shrinking cash reserves, and rising short-term liabilities. The large director loan and increased debtor balances suggest internal cash flow challenges. Proactive cash flow management, cost control, and formalizing loan repayments are essential to restoring financial health and ensuring a stable future.

THAT'S SEW TERRY FOX! LTD - Analysis Report

Company Number: 13909686

Analysis Date: 2025-07-29 20:41 UTC

Comprehensive Financial Health Assessment of THAT'S SEW TERRY FOX! LTD

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1. Financial Health Score: C

Explanation:
The company's financial health is moderate but showing signs of stress. It maintains positive net assets and working capital, indicating it is solvent and can meet short-term obligations. However, key indicators such as declining net assets, reduced cash reserves, rising current liabilities, and a large loan to the director reveal symptoms that warrant careful monitoring and corrective action to prevent financial distress.

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2. Key Vital Signs

Metric	2024	2023	Interpretation
Net Assets (Equity)	£30,465	£44,830	Declining equity suggests reduced company value or losses.
Net Current Assets	£17,162	£31,464	Positive but reduced working capital; liquidity tightening.
Cash at Bank	£5,949	£13,743	Significant cash reduction; potential cash flow concerns.
Debtors	£58,191	£40,266	Increased receivables may affect cash flow if not collected.
Current Liabilities	£46,978	£27,430	Sharply increased; more pressure on short-term payments.
Director Loan (Debtors)	£52,966	£38,976	Large, unsecured loan to director; risk to company liquidity.
Fixed Assets (Net Book Value)	£16,423	£17,497	Relatively stable, minor decrease.

Interpretation of Vital Signs:

• Positive Net Assets: The company remains solvent; assets exceed liabilities.
• Working Capital Decline: The reduction from £31.5k to £17.2k indicates tightening liquidity, a "weak pulse" suggesting cash flow management issues.
• Cash Reserves Dropped: Cash on hand halved, a "weak heartbeat," raising concerns about immediate payment capacity.
• Debtors Rise: Higher receivables may indicate slower customer payments or increased sales on credit—potentially risky if collection slows further.
• Current Liabilities Surge: Almost doubled, increasing short-term financial obligations that must be met promptly.
• Director Loan: A large portion of debtors is a loan to the director, which is unsecured and interest-free. This represents both a risk and a symptom of internal cash strain.

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3. Diagnosis

The financial "symptoms" paint a picture of a company experiencing liquidity strain despite maintaining solvency. The sharp rise in current liabilities and simultaneous fall in cash reserves suggest the company may be relying on deferring payments or credit facilities to meet obligations. The increased debtor balance, especially with a sizable loan to the director, indicates cash tied up and not readily available to cover expenses.

The declining net assets (from £44,830 to £30,465) signal erosion of retained earnings or accumulated losses, a warning "sign" that profitability may be under pressure or the business is investing heavily without immediate returns.

The absence of employees and the nature of the business (education, "other education not elsewhere classified") suggest a small operation, likely owner-managed, which can be both an advantage (agility) and a risk (dependence on single-person funding).

Overall, the company has a "moderate health" profile but with clear "stress indicators" in liquidity and reliance on director loans.

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4. Recommendations

To improve financial wellness and restore robust health, the company should consider the following actions:

1. Improve Cash Flow Management:

   • Accelerate collection of trade debtors to convert receivables into cash faster.
   • Review credit terms with customers and tighten where necessary.

2. Monitor and Reduce Current Liabilities:

   • Negotiate longer payment terms with suppliers or stagger payments to ease cash outflows.
   • Prioritize critical payments to maintain supplier relationships and avoid penalties.

3. Address Director Loan Exposure:

   • Formalize repayment plans for the director loan to recover company funds and reduce internal financial risk.
   • Consider whether this loan structure is sustainable or if external financing is preferable.

4. Cost Control and Profitability Focus:

   • Review operating expenses to identify opportunities for cost savings without impacting service quality.
   • Explore avenues to increase revenue or diversify income streams to rebuild reserves.

5. Financial Planning and Forecasting:

   • Prepare detailed cash flow forecasts to anticipate shortfalls and plan accordingly.
   • Engage with a financial advisor or accountant for strategic planning and tax optimisation.

6. Maintain Compliance and Reporting:

   • Continue timely filing of accounts and confirmation statements to avoid penalties and maintain credibility.

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Medical Analogy Summary

THAT'S SEW TERRY FOX! LTD currently shows a "stable but fatigued" financial condition. The company’s "vital signs" such as net assets and working capital are positive but weakening, akin to a patient whose blood pressure is adequate but trending downward. The "symptoms"—falling cash reserves, rising liabilities, and large director loan—signal internal strain and liquidity stress, warning of potential "financial malaise" if not addressed promptly. With focused management and corrective intervention, the company can recover its "financial vitality" and strengthen its position for sustainable growth.

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