THE UMBRELLA HOLISTIC APPROACH LTD

Executive Summary

THE UMBRELLA HOLISTIC APPROACH LTD has improved its financial health from a critical state in 2022 to a more stable position in 2023, evidenced by positive working capital and shareholders' funds. However, the company's low current assets indicate caution is needed to maintain liquidity and support growth. Focused cash flow management and prudent financial planning are recommended to ensure long-term sustainability.

THE UMBRELLA HOLISTIC APPROACH LTD - Analysis Report

Company Number: SC717571

Analysis Date: 2025-07-29 16:28 UTC

Financial Health Assessment Report for THE UMBRELLA HOLISTIC APPROACH LTD

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1. Financial Health Score: C

Explanation:
The company exhibits mixed financial signals. While it currently holds positive net assets and shareholder funds, there was a recent period of financial distress indicated by negative working capital. The micro-entity scale and limited financial activity simplify its profile, but the sharp reduction in current assets and presence of short-term liabilities warrant caution. Overall, the company is in a moderately stable position but shows symptoms that require attentive management.

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2. Key Vital Signs

Metric	2023 Value	2022 Value	Interpretation
Current Assets	£525	£4,432	Significant reduction in liquid assets; potential cash flow tightening.
Current Liabilities	£93	£4,000	Reduced short-term obligations, improving liquidity ratio.
Net Current Assets (Working Capital)	£432	-£689	Shift from negative to positive working capital indicates improved ability to meet short-term obligations.
Shareholders Funds (Equity)	£432	-£689	Recovery from negative equity to positive equity; a positive sign of financial health.
Average Employees	1	1	Very small operation, consistent staffing level.

Interpretation of Vital Signs:

• Working Capital: The turnaround from a negative working capital of -£689 in 2022 to a positive £432 in 2023 is a critical improvement. It indicates the company has addressed its immediate liquidity issues, reducing short-term financial distress symptoms.
• Equity Position: The improvement from a shareholders’ deficit to a positive equity balance shows a healthier financial foundation, suggesting the company has either reduced liabilities or improved asset management.
• Cash and Current Assets: Although current assets have dropped significantly (from £4,432 to £525), the reduction in liabilities has been more substantial. This dynamic indicates the company may have used cash reserves to pay down debts or liabilities, which is a strategic but cautious move.
• Size and Scale: Being a micro-entity with one employee and limited assets points to a lean business model, which can be both a strength (low overhead) and a risk (limited financial buffer).

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3. Diagnosis: Financial Condition Assessment

THE UMBRELLA HOLISTIC APPROACH LTD shows signs of recovering from financial distress experienced in 2022. The negative working capital and equity in 2022 were symptoms of liquidity and solvency strain, which could have threatened operational continuity. By 2023, the company has “stabilized” its financial position with positive working capital and equity, signaling a healthier balance sheet and better ability to meet short-term obligations.

However, the drastic decrease in current assets raises concerns about cash flow sustainability. The company may have depleted some reserves or faced challenges in revenue generation, as indicated by the low current asset figure. While creditors have decreased, which reduces immediate pressure, the low asset base limits financial flexibility.

The business operates in a niche retail sector with very limited scale, which means it is likely vulnerable to external shocks and market volatility. The sole director also holds full control and ownership, which concentrates decision-making but may limit access to additional capital or expertise.

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4. Recommendations: Improving Financial Wellness

• Maintain Healthy Cash Flow: Prioritize cash management to rebuild current assets. Explore opportunities to increase sales or diversify revenue streams to enhance liquidity buffers.
• Monitor and Manage Liabilities: Continue reducing short-term liabilities carefully; avoid taking on excessive debt that could strain working capital.
• Build Financial Reserves: Aim to gradually increase retained earnings and cash reserves to protect against future downturns or unexpected expenses.
• Consider Financial Planning Support: Engage with financial advisors or accountants to establish a robust budgeting and forecasting process, ensuring early detection of financial symptoms.
• Explore Growth Opportunities Cautiously: Given the micro-business size, any expansion should be carefully planned with clear cash flow projections to avoid overextension.
• Maintain Compliance and Reporting: Continue to file accounts and confirmation statements on time to avoid penalties and maintain good standing with Companies House.

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Medical Analogy Summary:

The company was showing symptoms of financial distress in 2022—akin to having a “weakened heart” with poor liquidity and negative equity. The 2023 figures suggest a successful treatment plan has been implemented, stabilizing the company’s “vital signs.” However, the “patient” remains fragile with low cash reserves, requiring ongoing monitoring and cautious management to avoid relapse. Strengthening the “immune system” via improved cash flow and reserves will increase resilience against future shocks.

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