Company Number: 14328187

Analysis Date: 2025-07-29 15:56 UTC

Financial Health Assessment for WAUNAVON LIMITED

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1. Financial Health Score: B

Explanation:
WAUNAVON LIMITED demonstrates a generally stable financial position for a young micro-entity, showing growth in fixed and current assets, along with a positive net asset base. However, the presence of significant long-term creditors and relatively tight working capital suggests some underlying financial stress symptoms that require monitoring. The score "B" indicates a fairly healthy financial status but with room for improvement to ensure sustained wellness.

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2. Key Vital Signs

Metric	2024 Value (£)	Interpretation
Fixed Assets	28,882	Healthy increase from previous year, indicates investment in long-term resources.
Current Assets	28,451	Growth in liquid resources, positive sign for operational liquidity.
Current Liabilities	31,964	Slightly higher than current assets, indicating a working capital deficit (net current assets negative).
Net Current Assets (Working Capital)	-3,513	Negative working capital signals potential short-term liquidity strain ("symptom of distress").
Creditors due after one year	18,750	Long-term liabilities appear for the first time; this debt needs careful management.
Net Assets (Equity)	6,619	Positive net assets indicate the company’s residual value is positive, a good sign.
Shareholders’ Funds	6,619	Mirrors net assets; shareholders have a modest but positive stake.
Number of Employees	2	Small workforce consistent with micro-entity status.

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3. Diagnosis

Underlying Business Health:

• Asset Growth: The company has significantly increased its fixed assets (from £5k to nearly £29k), suggesting investment in equipment or property, which is a healthy sign of business development and long-term thinking.
• Liquidity and Working Capital: Current liabilities exceed current assets by £3,513, indicating a working capital deficit. This is a "symptom of distress" for short-term obligations and may reflect tight cash flow or reliance on creditor financing.
• Long-Term Debt: The introduction of £18,750 in creditors due beyond one year introduces financial leverage. While this can fuel growth, it also adds risk, especially if revenue generation does not keep pace with debt servicing.
• Net Asset Position: The positive net asset value of £6,619 shows the company has accumulated some equity, which is encouraging for a business only two years old.
• Operational Scale: With just two employees, the business is operating on a small scale, which is typical for a micro-entity and consistent with its management consultancy SIC code.

Summary:
The company is showing early growth but faces pressure on liquidity due to negative working capital and new long-term liabilities. The "healthy cash flow" typical for a well-managed consultancy may be strained by these factors. The financial condition is stable but warrants close monitoring.

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4. Recommendations

1. Improve Working Capital Management:

   • Focus on accelerating receivables and managing payables to restore positive net current assets.
   • Consider negotiating better payment terms with suppliers or clients to ease cash flow.

2. Monitor Long-Term Debt Servicing:

   • Establish a clear plan for the repayment of long-term creditors to prevent future liquidity crises.
   • Avoid taking on additional long-term debt until current obligations are well managed.

3. Strengthen Cash Reserves:

   • Maintain a cash buffer to absorb short-term financial shocks.
   • Consider small short-term financing options if necessary to cover liquidity gaps.

4. Operational Efficiency:

   • With a small team, ensure that employee productivity is maximized to support revenue growth.
   • Explore opportunities to increase revenue streams in line with consultancy activities.

5. Regular Financial Review:

   • Conduct monthly financial health checks focusing on cash flow, working capital, and debt levels.
   • Engage with a financial advisor or accountant to implement proactive financial controls.

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