THINK TEST DO GROUP LTD

Executive Summary

Think Test Do Group Ltd shows promising growth in net assets and shareholder funds since its recent incorporation, indicating foundational financial strength. However, the company exhibits negative working capital, signaling potential liquidity challenges that need addressing through improved cash flow management and working capital optimization. With careful financial discipline and focus on revenue growth, the company can strengthen its financial health and sustain its business operations effectively.

THINK TEST DO GROUP LTD - Analysis Report

Company Number: 14124196

Analysis Date: 2025-07-20 14:09 UTC

Financial Health Assessment for THINK TEST DO GROUP LTD (as of 31 May 2024)

---

1. Financial Health Score: C

Explanation:
The company shows positive growth in net assets and shareholder funds since its incorporation, indicating some foundational strength. However, it exhibits negative working capital (net current assets), meaning current liabilities exceed current assets, which is a symptom of liquidity stress. The company is still young and classified as a micro-entity, limiting its scale and financial history. Overall, its financial condition is stable but with cautionary signs regarding short-term cash flow management.

---

2. Key Vital Signs

Metric	Value (£)	Interpretation
Fixed Assets	54,925	Growth from £4,318 in 2023 to £54,925 in 2024 indicates investment in long-term resources, possibly equipment or intangible assets critical to operations.
Current Assets	62,799	Increased significantly from £5,643, showing improvement in short-term assets like cash or receivables.
Current Liabilities	79,778	Increased significantly from £8,254, representing short-term debts or payables. This increase causes liquidity pressure.
Net Current Assets	-10,577	Negative working capital (current assets less current liabilities). This "symptom of distress" suggests potential challenges in meeting short-term obligations.
Total Assets Less Current Liabilities	44,348	Positive and growing, showing the company’s net worth after short-term debts, a "healthy balance sheet base."
Shareholders' Funds	44,348	Positive equity indicates the company is solvent and owners’ investments plus retained earnings exceed liabilities.
Average Number of Employees	2	Very small workforce, reflecting micro-entity status and a lean operational structure.

---

3. Diagnosis

Underlying Business Health:

• The company has invested in fixed assets, which might be foundational for future growth.
• The large increase in current liabilities relative to current assets raises a red flag regarding liquidity. Negative working capital means the company could face difficulties paying bills or suppliers on time unless current liabilities are managed or converted to longer-term debt.
• Shareholders’ funds have grown substantially, which is a good sign of retained earnings or capital injection improving net worth.
• Being a micro-entity and relatively new (incorporated in 2022), the company is still establishing its financial footing.
• The presence of only two employees indicates a small-scale operation, which may limit overhead but also scale and revenue potential.
• No indications of overdue filings or legal/administrative distress such as liquidation or administration.

Symptoms of Financial Distress:

• Negative net current assets is the main symptom that could lead to cash flow crunch if not addressed.
• Increasing creditors may indicate delayed payments or reliance on short-term credit, which can strain supplier relationships.

---

4. Recommendations

Actions to Improve Financial Wellness:

1. Improve Liquidity Management:

   • Monitor cash flows closely and aim to reduce current liabilities through negotiation of payment terms or restructuring short-term debt.
   • Accelerate collection of receivables and optimize inventory (if any) to convert assets into cash faster.

2. Strengthen Working Capital:

   • Consider injecting additional equity or securing longer-term financing to replace short-term creditors and stabilize working capital.
   • Maintain a cash buffer to avoid liquidity shocks.

3. Control Cost Growth:

   • As fixed assets have increased, ensure that these investments are generating returns to avoid tying up cash in non-productive assets.
   • Keep overheads low given the small team size and micro-entity status.

4. Focus on Revenue Growth:

   • As a management consultancy (SIC 70229), expanding client base and contracts will enhance cash inflows, helping to alleviate working capital pressure.

5. Regular Financial Monitoring:

   • Set monthly or quarterly financial reviews to track key metrics and detect any emerging symptoms early.

---