Company Number: 13478005

Analysis Date: 2025-07-29 14:44 UTC

Financial Health Assessment of WAVEGREEN CONSULTING LIMITED (as of 30 June 2024)

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1. Financial Health Score: B

Explanation:
WAVEGREEN CONSULTING LIMITED exhibits a generally stable financial position with positive net assets and working capital. However, the deterioration in net current assets and a moderate level of cash reserves relative to current liabilities signal some liquidity caution. The company is profitable with retained earnings, but recent dividend payments have reduced reserves. Overall, it shows signs of good health but with symptoms that require monitoring and some corrective steps.

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2. Key Vital Signs

Metric	2024 Value (£)	Interpretation
Net Current Assets (Working Capital)	991	Positive but reduced from £2,143 in 2023, indicating tighter liquidity ("working capital pulse weakening").
Cash and Cash Equivalents	6,509	Improved significantly from £234 in 2023, a "healthy cash flow" recovery sign.
Trade Debtors	4,935	Reduced from £11,695 in 2023, which may reflect better collections or lower sales.
Current Liabilities	10,453	Slight increase compared to 2023 (£9,786), pressure on short-term obligations.
Net Assets (Shareholders’ Funds)	2,980	Positive net worth, but down from £3,314 in 2023, showing slight erosion of equity.
Retained Earnings	2,880	Profitable with accumulated earnings, but dividend payouts have reduced reserves.
Profit for Year	2,666	Profit recorded for 2024, indicating ongoing operational success.
Dividends Paid	3,000	Outflow reducing retained earnings; balanced dividend policy recommended.

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3. Diagnosis: Financial Condition Analysis

• Liquidity Status:
  The company maintains a positive net current asset position (£991), which is like having a pulse but weaker than last year (£2,143). This suggests the company can cover its short-term obligations but with less breathing room. The dramatic increase in cash reserves is a good sign of improved liquidity, possibly due to better cash management or collection efforts.

• Profitability and Reserves:
  The company is generating profits (£2,666 in 2024) and has built reasonable retained earnings (£2,880). However, dividend payments (£3,000 in 2024) are consuming a significant portion of profits, which could reduce the company’s buffer against future shocks.

• Asset Management:
  The company has invested in property, plant, and equipment (carrying amount increased to £2,456), showing a commitment to fixed assets. Trade debtors have decreased, which may be a sign of improved credit control or lower sales volumes—this requires monitoring to ensure sales are not declining.

• Capital Structure and Control:
  The company is privately controlled by Mr. David Andrew Badcock, who holds 75%-100% ownership and voting rights. This concentrated control can enable swift decisions but may also limit external oversight.

• Risks and Symptoms:
  The reduction in net current assets and shareholders’ funds may be "symptoms of financial tightening." While there is no sign of distress or insolvency, the company should remain vigilant about cash flow timing and maintain or improve working capital levels.

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4. Recommendations

• Improve Working Capital Management:
  Enhance debtor collections and monitor creditor payment terms closely to prevent liquidity strain. Consider negotiating longer payment terms with suppliers or incentivizing early payment from clients to strengthen the cash conversion cycle.

• Balance Dividend Policy:
  While rewarding shareholders is important, consider retaining more profits to build a stronger financial cushion for future growth or unexpected expenses.

• Cash Flow Forecasting:
  Maintain detailed and frequent cash flow forecasts to anticipate potential shortfalls and manage expenditure accordingly.

• Monitor Asset Investment:
  Review fixed asset purchases to ensure they contribute positively to revenue generation and do not overstrain cash reserves.

• Strategic Growth Planning:
  Use the current profitable position as a foundation to explore growth opportunities cautiously, ensuring that expansion does not compromise financial stability.

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