THOUSAND LIONS LIMITED
Executive Summary
THOUSAND LIONS LIMITED currently exhibits signs of financial strain, particularly in liquidity and solvency, with negative working capital and net assets. However, recent improvements suggest potential for recovery if proactive measures are taken to enhance cash flow and manage liabilities. Focused financial management and strategic planning will be critical to restoring robust financial health.
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This analysis is opinion only and should not be interpreted as financial advice.
THOUSAND LIONS LIMITED - Analysis Report
Financial Health Assessment of THOUSAND LIONS LIMITED as of 30 June 2024
1. Financial Health Score: C
Explanation:
The company shows a moderate financial position with net liabilities (negative net current assets and negative total assets less current liabilities), indicating financial strain. However, the situation has improved year-over-year, suggesting some recovery or stabilization efforts. The absence of employees and reliance on a single controlling shareholder are notable considerations. Overall, the company’s financial health is fair but requires attention to address liquidity and solvency concerns.
2. Key Vital Signs
Metric | 2024 Value (£) | Interpretation |
---|---|---|
Fixed Assets | 17,267 | Represents long-term assets; slight decrease from prior year, indicating possible asset disposals. |
Current Assets | 4,856 | Short-term assets available; slight increase, which is positive for liquidity. |
Current Liabilities | 54,668 | Short-term debts; increased significantly, a symptom of rising short-term obligations. |
Net Current Assets (Working Capital) | -49,812 | Negative and worsening; indicates inability to cover short-term liabilities with current assets. |
Total Assets Less Current Liabilities | -32,545 | Negative value; suggests overall liabilities exceed assets, a sign of financial distress. |
Net Assets (Shareholders' Funds) | -32,545 | Negative equity; means the company owes more than it owns, a key symptom of financial imbalance. |
Average Number of Employees | 0 | No employees, suggesting limited operational scale or reliance on contractors/outsourcing. |
Interpretation of Vital Signs:
- The negative net current assets is a critical symptom of liquidity stress—like a patient with low 'blood pressure' unable to circulate cash effectively.
- Increasing current liabilities alongside rising current assets suggests that while some short-term resources have improved, liabilities are growing faster, indicating a risk of cash flow shortages.
- Negative net assets is akin to a company’s "balance sheet deficit," showing the business is technically insolvent on paper and dependent on external support or turnaround strategies.
3. Diagnosis
THOUSAND LIONS LIMITED is in a financially fragile state. The company is exhibiting symptoms typical of a business under liquidity pressure:
- Liquidity Challenges: Negative working capital indicates the company cannot currently meet its short-term obligations with available liquid assets. This is a vital sign of distress that, if unresolved, could lead to insolvency.
- Solvency Concerns: Negative net assets highlight that the company’s total liabilities exceed its assets, a red flag for creditors and investors. This condition is analogous to a patient with a chronic deficit in vital nutrients.
- Operational Scale: Zero employees suggest a very lean operation, possibly relying on the director(s) or outsourced services, which may limit growth potential but also keeps fixed costs low.
- Ownership Structure: The sole significant controller owns 75-100% of shares and voting rights, providing centralized decision-making but also placing financial risk heavily on one individual.
Despite these symptoms, the company has shown some improvement from 2023 to 2024 in net assets (less negative), indicating some progress in managing financial stress.
4. Recommendations to Improve Financial Wellness
Improve Liquidity (Healthy Cash Flow):
- Prioritize reducing current liabilities through negotiation with creditors or restructuring short-term debts.
- Enhance cash inflows by accelerating receivables or increasing revenues.
- Consider injecting additional equity or unsecured loans from the shareholder to shore up working capital.
Cost Management:
- Maintain low operational costs given the absence of employees; verify if outsourcing or director-related expenses can be further optimized.
Financial Monitoring and Forecasting:
- Implement rigorous cash flow forecasting to anticipate liquidity needs and avoid surprises, similar to regular health check-ups to catch symptoms early.
Strategic Growth or Diversification:
- Explore opportunities to increase revenue streams within the management consultancy sector while managing risks carefully.
- Consider partnerships or alliances that can bring financial and operational support.
Governance and Risk Management:
- Given sole control by one PSC, consider establishing advisory support or independent oversight to strengthen decision-making and risk management.
Prepare for Contingencies:
- Develop contingency plans for potential financial distress scenarios, including insolvency procedures, to safeguard stakeholder interests.
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