UGLY DUCK SYSTEMS LTD

Executive Summary

UGLY DUCK SYSTEMS LTD is a young company with positive net assets but currently exhibits negative working capital, indicating liquidity strain typical of early-stage businesses. While solvent, the company should focus on improving cash flow management and transparency in financial reporting to strengthen its financial health. With prudent financial controls and operational growth, the outlook can improve significantly over the next reporting periods.

UGLY DUCK SYSTEMS LTD - Analysis Report

Company Number: 13828080

Analysis Date: 2025-07-29 14:23 UTC

Financial Health Assessment for UGLY DUCK SYSTEMS LTD

---

1. Financial Health Score: C (Fair)

Explanation:
UGLY DUCK SYSTEMS LTD shows a start-up phase profile with a modest asset base and negative working capital as of the latest accounts. The company has positive net assets and shareholder funds but a slight current liabilities position exceeding current assets, indicating a symptom of liquidity strain. Overall, the financial condition is fair but precarious, requiring close monitoring and proactive measures to improve cash flow and working capital management.

---

2. Key Vital Signs

Metric	Value (£)	Interpretation
Fixed Assets	2,038	Indicates investment in tangible assets (likely equipment).
Current Assets	0	No cash or short-term assets available to cover liabilities.
Current Liabilities	207	Low level of short-term obligations, but exceeds current assets.
Net Current Assets (Working Capital)	-207	Negative; a symptom of short-term liquidity stress.
Net Assets / Shareholders’ Funds	1,831	Positive equity base; reflects accumulated retained earnings.
Number of Employees	2	Small size; typical for micro/small company category.
Turnover	Not disclosed	Revenue not explicitly reported; limits assessment of operational performance.

Interpretation:

• Negative Working Capital: The company has current liabilities slightly exceeding current assets, which is a red flag indicating potential cash flow pressure to meet short-term obligations. This is a symptom of liquidity distress but currently at a low absolute level (£207).
• Positive Net Assets: Despite liquidity concerns, shareholder funds and net assets are positive (£1,831), showing the company has some cushion and asset backing. This suggests the company is solvent at the balance sheet date.
• Fixed Asset Investment: The company has invested in tangible assets (~£2,038), which may be necessary for its IT consultancy operations. The depreciation policy (30% reducing balance) reflects normal wear and tear.
• Start-up Phase: The company was incorporated in 2022, and the financials show growth from £0 net assets in 2022 to £1,831 in 2024, indicating some initial capital injection and operational progress.

---

3. Diagnosis: Overall Financial Condition

UGLY DUCK SYSTEMS LTD is in an early growth stage with a solid equity base but limited liquidity. The negative working capital is a symptom of current cash flow constraints, which is common in new companies investing in assets and building operations. The absence of disclosed turnover and profit/loss figures in the accounts makes it difficult to fully gauge operational efficiency and profitability, which are critical to sustainable financial health.

The company benefits from low current liabilities and a small number of employees, indicating manageable operational scale. The directors have chosen exemption from audit, common for small companies, but this limits external assurance on financial robustness.

Financial Health Analogy:
Think of the company as a young adult with a healthy backbone (positive net assets) but slightly out of breath (negative working capital) — the body is fundamentally strong but needs to improve stamina (liquidity and cash flow) to avoid collapse.

---

4. Recommendations to Improve Financial Wellness

1. Improve Cash Flow Management:

   • Monitor and accelerate receivables collection and manage payables to maintain positive working capital. Consider short-term financing if necessary to cover timing gaps.

2. Increase Revenue Transparency:

   • Provide detailed turnover and profit/loss information in future financial statements to give stakeholders clearer insights into operational performance and profitability trends.

3. Optimize Asset Utilization:

   • Assess the tangible fixed assets for efficient use and potential disposals if underutilized, to convert assets to cash if liquidity tightens.

4. Plan for Growth and Scaling:

   • Develop a financial forecast incorporating projected revenues, expenses, and cash flow to anticipate future funding needs and operational scaling.

5. Strengthen Equity Base:

   • Consider additional capital injections or retained earnings to build a stronger buffer against liquidity shocks.

6. Regular Financial Reviews:

   • Conduct periodic health checks on liquidity ratios and solvency to preempt financial distress symptoms.

---