TOM BENNETT EDITORIAL LTD

Executive Summary

TOM BENNETT EDITORIAL LTD shows early signs of financial stress with sharply reduced liquidity and net assets after a previously stable position. Immediate actions to improve cash flow, manage liabilities, and strengthen capital are crucial to prevent further deterioration and restore financial health.

TOM BENNETT EDITORIAL LTD - Analysis Report

Company Number: 13117979

Analysis Date: 2025-07-19 12:57 UTC

Financial Health Assessment Report for TOM BENNETT EDITORIAL LTD

Assessment Date: Financial year ending 31 January 2024

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1. Financial Health Score: Grade C (Fair)

Explanation:
The company shows signs of financial survival but with weakening liquidity and net asset position. The narrowing margin of net current assets and significant reduction in shareholders’ funds compared to previous years indicate early symptoms of financial strain. While not in immediate distress, the company must address cash flow and working capital management to avoid deterioration.

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2. Key Vital Signs: Critical Metrics & Interpretation

Metric	2024 (£)	2023 (£)	Interpretation
Current Assets	3,712	5,810	Decrease signals reduced liquid resources and receivables.
Cash at Bank	2,186	2,835	Declining cash reserves reduce ability to meet short-term needs.
Debtors	1,526	2,975	Lower receivables could indicate slower sales or better collection.
Current Liabilities	3,650	3,139	Increased short-term debts increase liquidity pressure.
Net Current Assets	62	2,671	Barely positive, indicating working capital is critically low.
Shareholders’ Funds	62	2,671	Equity severely diminished; company’s net worth has eroded.
Share Capital	1	1	Minimal capital base.

Interpretation:

• Healthy cash flow is evidenced by positive cash balances, but the significant drop suggests tightening liquidity.
• The working capital margin (current assets minus current liabilities) is very thin (£62), showing the company barely covers its short-term debts, a symptom of financial stress.
• The equity base (shareholders’ funds) has shrunk dramatically from £2,671 to £62, pointing to accumulated losses or withdrawals impacting net worth.
• The company’s reliance on director advances (£1,525 loan outstanding to director) might be a temporary measure but adds financial risk if not repaid promptly.

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3. Diagnosis: Overall Financial Condition

TOM BENNETT EDITORIAL LTD is currently in a fragile financial state. The financial "vital signs" reveal a company that has transitioned from a relatively stable position in 2022-23 to one with severely diminished liquidity and equity reserves by early 2024. The symptoms of distress include:

• Sharp decline in working capital and net assets, indicating potential cash flow constraints.
• Increasing current liabilities relative to assets, which could impair the company's ability to meet obligations timely.
• Dependence on director’s loan to shore up liquidity, which while helpful, is not a sustainable funding source.

The company is not insolvent but is on the borderline, requiring close monitoring and swift action to restore financial health.

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4. Recommendations: Specific Actions to Improve Financial Wellness

1. Improve Cash Flow Management:

   • Accelerate debtor collections to boost cash inflow.
   • Negotiate extended payment terms with creditors to ease immediate cash outflows.

2. Reduce Current Liabilities:

   • Prioritize repayment or restructuring of short-term debts.
   • Avoid incurring additional short-term obligations unless absolutely necessary.

3. Strengthen Capital Base:

   • Consider capital injection through equity or shareholder loans to rebuild net assets.
   • Explore external funding options such as small business loans or grants to support working capital.

4. Monitor Director Advances:

   • Formalize repayment plan for the director’s loan to ensure transparency and financial discipline.

5. Review Business Model and Costs:

   • Assess revenue streams and operational expenses for opportunities to increase profitability and reduce costs.
   • Improve budgeting and financial forecasting to anticipate and manage liquidity risks.

6. Regular Financial Health Checks:

   • Establish quarterly reviews of key financial metrics to detect early warning signs.
   • Engage with professional advisors for tailored financial planning.

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Medical Analogy Summary

The company’s financial health is akin to a patient whose vital signs have deteriorated from stable to precariously low. The cash flow heartbeat is weak, and the working capital lungs are struggling to breathe, signaling the need for immediate care to avoid a financial crisis. Without intervention, these symptoms may develop into critical illness (insolvency).

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