UNITED AGENCY LIMITED

Executive Summary

United Agency Limited is solvent with positive net assets but shows persistent liquidity challenges due to negative working capital, signaling cash flow constraints. While compliant and stable in operations, the company needs to focus on improving cash flow management and working capital to strengthen its financial resilience and support future growth.

UNITED AGENCY LIMITED - Analysis Report

Company Number: 13990820

Analysis Date: 2025-07-29 16:59 UTC

Financial Health Assessment for UNITED AGENCY LIMITED (Year ending 31 March 2024)

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1. Financial Health Score: C

Explanation:
The company shows stable but strained financial health. It maintains positive net assets, indicating solvency, but persistent net current liabilities ("working capital deficit") are a warning sign of liquidity stress. As a micro-entity with limited operational scale and resources, this score reflects a cautious outlook: the business is not in crisis but shows symptoms of financial tightness that require management attention.

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2. Key Vital Signs

Metric	2024 Value	Interpretation
Fixed Assets	£101,568	Stable long-term investment base, little change from prior years.
Current Assets	£81,142	Liquid assets available in short term, slightly decreasing.
Current Liabilities	£141,859	Short-term debts due, slightly increasing over 3 years.
Net Current Assets (Working Capital)	-£60,717	Negative working capital indicates liquidity pressure; company may struggle to cover short-term debts with available assets.
Net Assets (Shareholders’ Funds)	£40,851	Positive equity shows company is solvent overall, with assets exceeding liabilities.
Employee Count	4	Small team consistent over the years, reflecting micro-entity status.

Vital Sign Analysis:

• Negative working capital is a key symptom of financial distress. It suggests the company relies on external financing or delayed payments to meet its short-term obligations.
• Stable net assets indicate the company’s total asset base still comfortably exceeds liabilities, which is a healthy sign of solvency.
• No audit requirement due to micro-entity status means financial controls may be limited, increasing risk of unnoticed financial strain.
• The slight decline in current assets alongside rising current liabilities exacerbates liquidity risk.

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3. Diagnosis

Underlying Business Health:
United Agency Limited is a young, small-scale IT services provider with a modest asset base and a consistent workforce of 4 employees. The company is solvent (net assets positive) but exhibits persistent liquidity concerns due to negative working capital. This indicates a "symptom of distress" where short-term debts exceed readily available assets, potentially leading to cash flow challenges.

The static fixed assets and shareholder funds suggest the company is not aggressively expanding or investing, which may reflect a cautious or constrained business model. The stable employee count supports this interpretation.

Risk Factors:

• Potential difficulty in meeting short-term obligations without securing additional financing or improving cash collection.
• Reliance on director/shareholder support or credit lines to bridge the working capital gap.
• Limited capacity to absorb financial shocks or invest in growth due to tight liquidity.

Strengths:

• Positive net asset position confirms the company is not insolvent.
• No overdue filings or penalties indicate compliant corporate governance.
• Directors hold significant ownership and presumably control, which can facilitate swift decision-making.

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4. Recommendations

To improve financial wellness and address the symptoms of distress, the company should consider the following actions:

1. Enhance Cash Flow Management:

   • Tighten credit control procedures to accelerate debtor collections.
   • Negotiate extended payment terms with suppliers to reduce current liabilities pressure.
   • Maintain a cash flow forecast to anticipate shortfalls and plan accordingly.

2. Strengthen Working Capital Position:

   • Explore short-term financing options such as overdrafts or invoice factoring to cover the working capital deficit.
   • Consider reducing inventory levels if applicable to free up cash.

3. Cost Control and Efficiency:

   • Review operating expenses for potential savings without compromising service quality.
   • Monitor employee productivity closely given small team size.

4. Strategic Growth Planning:

   • Evaluate opportunities for modest investment in marketing or service innovation that can increase revenue and improve liquidity over time.
   • Plan for scaling operations carefully to avoid exacerbating liquidity issues.

5. Regular Financial Monitoring:

   • Implement monthly management accounts to track key metrics and detect early signs of financial stress.
   • Engage with financial advisors periodically for professional oversight.

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