TRANSFER TEST LIMITED

Executive Summary

TRANSFER TEST LIMITED shows a stable and solvent financial position with positive working capital and net assets. However, the extremely low cash balance and heavy reliance on amounts owed by related companies signal potential liquidity challenges. Proactive cash management and intercompany risk monitoring are recommended to maintain financial vitality and support sustainable growth.

TRANSFER TEST LIMITED - Analysis Report

Company Number: NI689015

Analysis Date: 2025-07-20 13:28 UTC

Financial Health Assessment of TRANSFER TEST LIMITED

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1. Financial Health Score: B

Explanation:
TRANSFER TEST LIMITED exhibits stable and consistent financial metrics over the past two years with satisfactory working capital and positive net assets. The company is small-scale, with a simple balance sheet reflecting early-stage operations. The score "B" reflects a generally healthy financial position but with limited liquidity (very low cash reserves) and reliance on intercompany balances that could pose risks if not managed carefully.

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2. Key Vital Signs

Metric	2024 Value (£)	Interpretation
Current Assets	23,004	Adequate short-term assets primarily in debtors, but very low cash on hand (£59), indicating limited liquid resources.
Cash	59	Extremely low cash balance ("weak pulse" in cash flow), potential symptom of liquidity strain.
Debtors	22,945	Majority of current assets tied up in amounts owed by related entities, indicating dependency on group companies.
Current Liabilities	7,793	Manageable short-term obligations, but includes corporation tax liability (£6,044), which needs careful planning.
Net Current Assets	15,211	Positive working capital ("healthy buffer") suggesting ability to meet short-term obligations.
Net Assets (Equity)	15,211	Positive net worth, indicating the company is solvent and funded by shareholder equity.
Shareholders Funds	15,211	Consistent with net assets, shows no accumulated losses, stable equity base.
Employee Numbers	2	Small workforce consistent with small company scale.

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3. Diagnosis: Financial Condition and Symptoms

• Balance Sheet Strength: The company maintains positive net assets and net current assets, demonstrating a "healthy skeleton" structure with no debts exceeding assets.
• Liquidity Concern: The extremely low cash balance ("weak heartbeat") is a symptom of potential liquidity tightness. The company relies heavily on receivables from related parties rather than cash, which may delay meeting immediate expenses.
• Dependency on Related Parties: A significant portion of current assets is amounts owed by group companies, reflecting intercompany transactions. This dependency could be a concern if related parties face financial difficulties.
• Profitability and Reserves: The profit and loss reserve shows a stable retained earnings position, but with no detailed profit and loss data disclosed, assessment of operational profitability is limited. The exemption from audit and filing of filleted accounts suggests simplicity but less transparency.
• Tax Liability: The corporation tax liability is significant relative to current liabilities, requiring careful management to avoid cash flow disruptions.
• Company Scale: The company qualifies as a small entity under filing thresholds, consistent with its financial size and workforce.

Overall, the company is solvent with a stable equity position but shows symptoms of "cash flow faintness" due to minimal liquid funds and reliance on related-party receivables.

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4. Recommendations: Actions to Improve Financial Wellness

• Improve Cash Reserves: Prioritize converting debtors into cash more swiftly, particularly intercompany receivables, to strengthen liquidity and maintain a "strong pulse" in daily operations.
• Monitor Intercompany Exposure: Regularly review the creditworthiness and payment terms with related parties to mitigate risks from dependency on group company payments.
• Tax Planning: Implement effective tax planning to ensure corporation tax liabilities are anticipated and adequately provisioned, avoiding sudden cash flow strain.
• Operational Transparency: Consider preparing a more detailed internal management report on profitability and cash flow to detect early signs of financial distress.
• Build Cash Flow Forecast: Develop a rolling cash flow forecast to anticipate liquidity needs and prevent "cash flow fainting spells."
• Consider Diversification: Explore opportunities to reduce reliance on related-party transactions by expanding customer base or revenue streams to strengthen financial independence.

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