TOM SESSIONS CONSULTING LTD

Executive Summary

Tom Sessions Consulting Ltd shows a generally stable financial position but is exhibiting early symptoms of liquidity stress and net asset erosion, warranting attention to cash flow and profitability. Proactive management of working capital, related party exposures, and cost control is recommended to maintain financial wellness and ensure sustainable growth.

TOM SESSIONS CONSULTING LTD - Analysis Report

Company Number: 13041043

Analysis Date: 2025-07-20 12:49 UTC

Financial Health Assessment of Tom Sessions Consulting Ltd as of 30 November 2024

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1. Financial Health Score: B

Explanation:
Tom Sessions Consulting Ltd demonstrates generally sound financial health with solid net assets and positive working capital. However, a notable decline in liquidity and net assets over the latest year indicates emerging signs of financial strain that warrant attention. The "B" grade reflects a company that is fundamentally stable but showing some symptoms that require proactive management.

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2. Key Vital Signs

Metric	2024 Value (£)	2023 Value (£)	Interpretation
Current Assets	51,656	85,858	Substantial decrease (~40%), indicating reduced liquid resources and receivables.
Cash at Bank	17,034	39,828	Significant drop in cash reserves (~57%), a "weak pulse" in cash flow health.
Debtors	34,622	46,030	Reduced but still represents a large portion of current assets; risk of delayed payments.
Current Liabilities	17,417	31,234	Decreased liabilities, easing short-term obligations but possibly linked to reduced operations.
Net Current Assets (Working Capital)	34,239	54,624	Working capital remains positive, indicating the company can cover short-term debts.
Net Assets (Shareholders’ Funds)	36,567	58,225	Decline (~37%) signals a loss of retained earnings and overall net worth reduction.
Share Capital	100	100	Minimal share capital, typical for small private companies.
Loans to Related Parties	12,000 (Debtors)	10,000 (Debtors)	Increasing exposure to related party loans, carrying potential recovery risk.
Loans from Directors (Creditors)	1,821	6,660	Decreased director loans, reducing financial support risk but also liquidity buffer.
Fixed Assets (Net Book Value)	3,037	4,664	Declining fixed assets due to disposals/depreciation, reflecting asset utilisation or sale.

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3. Diagnosis: Financial "Health" and Symptoms

• Healthy Cash Flow Concerns: The cash reserves have more than halved from £39,828 to £17,034, a symptom of potential liquidity stress. While the company still holds sufficient working capital, the sharp fall in cash is a warning sign that cash inflows may be slowing or cash outflows rising.

• Eroding Net Worth: The decline in net assets from £58,225 to £36,567 suggests accumulated losses or dividend distributions exceeding profits. This signals a weakening balance sheet "immune system" that could reduce the company’s resilience to shocks.

• Receivables Concentration: Debtors represent a large share of current assets (~67%), implying reliance on timely payments. Any delays could exacerbate liquidity issues and cause "symptoms" like cash flow crunch.

• Related Party Exposure: The £12,000 loan to a related company introduces risk if the related party’s financial health deteriorates, possibly causing delayed repayment or impairment.

• Liabilities Management: The reduction in current liabilities from £31,234 to £17,417 reduces immediate financial pressure. However, the decline could also reflect fewer operating activities or delayed creditor payments, both of which require monitoring.

• Asset Base: Tangible fixed assets have decreased, which may indicate asset sales or write-downs. While this can generate short-term cash, it may also reduce operational capacity long-term.

• Company Size and Filing: The company is a small private limited entity, filing unaudited abridged accounts, which is appropriate. No overdue filings or regulatory concerns are noted.

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4. Recommendations: Prescription for Financial Wellness

1. Strengthen Cash Flow Management:
   Implement tighter controls on cash inflows and outflows. Accelerate debtor collections via incentives or stricter credit terms. Review payment schedules to suppliers to optimise cash retention.

2. Review Profitability and Cost Structure:
   Investigate causes of net asset decline. If losses are recurring, address pricing, cost control, and operational efficiencies to restore profitability and rebuild reserves.

3. Monitor and Manage Related Party Loans:
   Ensure related party loans are recoverable and documented with clear repayment terms. Consider risk mitigation like collateral or guarantees.

4. Maintain Working Capital Balance:
   Keep a healthy buffer of current assets over liabilities, focusing on liquid assets (cash) rather than receivables or other less liquid assets.

5. Plan for Asset Utilisation:
   Consider the impact of fixed asset disposals on service delivery capacity. Reinvest proceeds wisely if necessary to support core business functions.

6. Regular Financial Review:
   Establish periodic financial health checks to detect early signs of distress. Engage with financial advisors to support strategic decision making.

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