WALTON WEB SERVICES LTD

Executive Summary

Walton Web Services Ltd is currently experiencing significant financial strain marked by a severe cash flow crisis and negative working capital, resulting in a substantial erosion of shareholder equity. Immediate action to improve liquidity and revenue generation is critical to avoid escalating financial distress. With targeted management and financial controls, the company may stabilize its financial health and improve its outlook.

WALTON WEB SERVICES LTD - Analysis Report

Company Number: 13792176

Analysis Date: 2025-07-29 17:24 UTC

Financial Health Assessment: WALTON WEB SERVICES LTD (Year ended 31 March 2024)

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1. Financial Health Score: D

Explanation:
The company shows clear symptoms of financial distress in its latest fiscal year, with a significant erosion of working capital and a sharp decline in net assets compared to the previous year. The financial "vital signs" indicate weakening liquidity and capital structure, warranting a cautious outlook and urgent remedial action.

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2. Key Vital Signs

Metric	2024 Value (£)	2023 Value (£)	Interpretation
Fixed Assets	4,544	5,237	Slight reduction; stable long-term asset base
Current Assets	205	25,934	Drastic drop; cash and receivables severely depleted
Cash	70	17,078	Critically low cash reserves ("weak pulse")
Debtors	135	8,856	Significant decrease; possible revenue collection issues or drop in sales
Current Liabilities	4,108	21,825	Reduced liabilities, but still substantial
Net Current Assets (Working Capital)	-3,903	4,109	Negative working capital; liquidity problem
Total Assets Less Current Liabilities (Net Assets)	641	9,346	Sharp decline; "weak heart" of the balance sheet
Shareholders’ Funds	641	9,346	Equity erosion; loss absorption capacity diminished

Additional Observations:

• The company is a micro private limited company operating in software development.
• Director Mr. Nathan Hugh Walton holds full control and has provided an unsecured loan of £3,087 interest-free, indicating some internal financial support.
• The company has no employees currently (average zero), which may affect operational capacity.

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3. Diagnosis: What the Numbers Reveal

• Liquidity Crisis: The company’s cash reserves have dropped dramatically from £17,078 to £70, indicating a "faltering pulse" in cash flow health. This suggests difficulties in meeting immediate financial obligations, which is critical for day-to-day operations.

• Working Capital Deficiency: Negative net current assets (-£3,903) mean the company owes more in the short term than it owns in liquid assets. This "symptom of distress" raises red flags about the company’s ability to pay creditors and suppliers timely.

• Equity Erosion: Shareholders' funds shrank from £9,346 to £641, indicating accumulated losses or distributions exceeding profits. This reduces the company’s buffer against financial shocks.

• Reduced Debtors and Revenues: The drop in trade debtors from £8,856 to zero (now only £135 in other debtors) may reflect lower sales or challenges in billing and collections, hinting at operational or market issues.

• Asset Base Slightly Reduced: Fixed assets remain relatively stable, but depreciation and asset write-downs have slightly reduced their value, which is typical but noteworthy in the context of other weakening signs.

• Internal Financing: The director's loan suggests reliance on personal funding to keep operations afloat, a "life support" measure rather than sustainable financing.

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4. Prognosis: Future Financial Outlook

Without intervention, the company risks continuing liquidity strain, which could lead to missed payments, supplier relationship deterioration, or even insolvency. However, the presence of a committed controlling director and low liabilities relative to prior year suggests some potential for recovery if cash inflows improve.

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5. Recommendations: Steps to Improve Financial Wellness

• Improve Cash Flow Management: Prioritize accelerating receivables collection, delay discretionary expenses, and negotiate extended payment terms with creditors to relieve short-term cash pressure.

• Revenue Growth Strategies: Reassess sales and marketing tactics to increase turnover, possibly leveraging the director’s industry experience as a software engineer to expand client base or service offerings.

• Explore External Financing: Consider securing short-term credit lines or investor funding to stabilize liquidity without over-reliance on director loans.

• Cost Control and Operational Review: Evaluate current cost structure and reduce non-essential costs, especially given the absence of employees, to preserve cash.

• Regular Financial Monitoring: Establish frequent financial health checks ("vital signs monitoring") to detect early warning symptoms and respond proactively.

• Consider Professional Advice: Engage financial advisors or turnaround specialists if financial distress symptoms persist or deepen.

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Executive Summary