Company Number: 13149558

Analysis Date: 2025-07-29 13:23 UTC

Financial Health Assessment for WATERSIDE ALLIANCE LIMITED

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1. Financial Health Score: C

Explanation:
The company exhibits some positive attributes such as growing fixed assets and stable incorporation status, but it also shows concerning signs including persistent net current liabilities (working capital deficits) and declining net assets. These symptoms indicate financial stress that requires careful management but not immediate crisis.

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2. Key Vital Signs

Metric	2024 (£)	2023 (£)	Interpretation
Fixed Assets	60,305	24,403	Increasing investment in long-term assets — healthy for future operations.
Current Assets	108,372	76,128	Growing liquidity pool, positive sign.
Current Liabilities	159,635	84,105	Significant increase in short-term debts — a red flag.
Net Current Assets	(51,263)	(7,977)	Negative working capital — symptoms of cash flow strain.
Total Assets Less Current Liabilities	9,042	16,426	Declining buffer after covering short-term debts — caution needed.
Net Assets (Shareholders Funds)	8,792	13,426	Decreasing equity base — indicates erosion of company net worth.
Share Capital	100	100	Minimal paid-up capital — typical for micro companies.

Additional Notes:

• Average employees stable at 3, reflecting a micro business scale.
• No audit requirement under micro-entity provisions; accounts unaudited.
• Directors remain active without any disqualification records.
• Company operates in SIC 56290 (Other food services), an industry that can be volatile and sensitive to cash flow.

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3. Diagnosis

Symptoms Analysis:

• The company’s negative net current assets (working capital deficit) in both years — worsening from (£7,977) to (£51,263) — indicate that current liabilities significantly exceed current assets. This imbalance is a classic symptom of liquidity stress, meaning the company may struggle to meet short-term obligations without securing additional funding or converting assets quickly to cash.
• Despite the increase in fixed assets, possibly signalling strategic investment or expansion, the surge in current liabilities outpaces current assets growth, suggesting reliance on short-term credit or delayed payments to suppliers.
• Net assets have declined from £13,426 in 2023 to £8,792 in 2024, revealing erosion in owner equity, which could be due to operational losses or increased liabilities.
• The company maintains a very modest share capital (£100), common for micro businesses, but this offers limited financial cushion.
• The balance sheet shows a small buffer after covering current liabilities, but this is shrinking, highlighting growing financial vulnerability.

Overall Diagnosis:
Waterside Alliance Limited is experiencing signs of financial strain, primarily liquidity issues as evidenced by negative working capital and reduced net assets. While the company is still solvent, the increasing short-term liabilities and declining net worth suggest careful monitoring and proactive management are essential to avoid worsening distress. The business has some healthy signs like asset growth but these are overshadowed by cash flow management challenges.

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4. Recommendations

1. Improve Cash Flow Management:

   • Prioritise collecting receivables faster and extending payment terms with suppliers where possible.
   • Consider short-term financing options or overdraft facilities to bridge working capital gaps.

2. Review Current Liabilities:

   • Analyse the nature of current liabilities (e.g., trade creditors, loans). Negotiate payment schedules to reduce pressure on immediate cash outflows.

3. Cost Control:

   • Evaluate operational expenses and staffing levels to ensure the company is not overextending financially.

4. Increase Equity Base:

   • Explore options for capital injection either from existing shareholders or new investors to strengthen the balance sheet.

5. Strategic Asset Utilisation:

   • Ensure fixed assets are generating sufficient revenue or consider disposing of non-essential assets to free cash.

6. Regular Financial Monitoring:

   • Implement monthly cash flow forecasts and financial reviews to detect early signs of distress.

7. Professional Advice:

   • Engage a financial advisor or accountant for ongoing support, especially given the company's micro status and limited resources.

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