WHITE MIRROR STUDIO LTD

Executive Summary

WHITE MIRROR STUDIO LTD is a young, asset-backed company facing liquidity challenges due to negative working capital, which limits its ability to cover short-term obligations. While its overall equity position is positive, the company should focus on improving cash flow and managing payables to stabilize financial health and support growth. Prompt action on liquidity management and revenue enhancement will enhance its financial resilience.

WHITE MIRROR STUDIO LTD - Analysis Report

Company Number: 14525338

Analysis Date: 2025-07-20 14:08 UTC

Financial Health Assessment of WHITE MIRROR STUDIO LTD (as at 31 December 2023)

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1. Financial Health Score: C

Explanation:
WHITE MIRROR STUDIO LTD exhibits characteristics of a young and small company with early-stage financial performance. The company has positive net assets and shareholders' funds, indicating some equity cushion. However, the presence of net current liabilities (negative working capital) and a cash balance lower than current liabilities signals liquidity stress or "symptoms of financial strain." The score "C" reflects a cautious but not critical position—there is room to improve liquidity and cash flow management to ensure sustainable operations.

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2. Key Vital Signs

Metric	Value (£)	Interpretation
Cash at bank	30,825	Modest cash reserve; provides some liquidity but insufficient to cover all short-term obligations.
Current Liabilities	50,416	Debts and payables due within one year; higher than cash and current assets combined.
Net Current Assets	-19,591	Negative working capital indicates potential liquidity risk; company owes more short-term than it owns.
Net Assets	14,209	Positive equity base; company’s assets exceed liabilities overall, a sign of residual value.
Shareholders’ Funds	14,209	Represents the owners’ stake; positive but small, reflecting limited retained earnings or investment.
Fixed Assets (Tangible)	33,800	Investment in equipment and fixtures; relatively high compared to cash, showing capital expenditure.

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3. Diagnosis

The company's "vital signs" reveal it is in a formative stage with foundational assets in place but facing liquidity challenges. The negative net current assets are a key "symptom" of potential distress: the company currently does not have enough liquid resources to cover its immediate obligations. This condition puts pressure on short-term solvency and operational flexibility.

However, the positive net assets and shareholders’ funds indicate that the company has some financial "resilience" due to tangible fixed assets and equity capital. The balance sheet suggests that the company is asset-rich but cash-poor, which is common in start-ups investing heavily in equipment.

The directors and shareholders appear engaged and have a clear ownership structure, which bodes well for governance and strategic decision-making. The filing compliance is current, indicating good administrative health.

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4. Recommendations

1. Improve Liquidity (Cash Flow Management):

   • Prioritize converting receivables or inventory into cash faster.
   • Negotiate better payment terms with suppliers to delay outflows.
   • Explore short-term financing options, e.g., overdrafts or invoice financing, to cover working capital gaps.

2. Monitor and Manage Current Liabilities:

   • Carefully control accruals, taxes, and other payables to avoid late payments or penalties.
   • Regularly review creditor aging reports to prevent liquidity squeeze.

3. Revenue and Profitability Focus:

   • Enhance sales efforts or diversify service offerings to increase turnover and generate positive cash inflows.
   • Evaluate pricing strategy and contract terms to improve margins.

4. Asset Utilization:

   • Assess whether all fixed assets are optimally used or if some can be sold or leased to improve liquidity.
   • Plan depreciation and capital expenditure to align with cash generation.

5. Financial Forecasting and Planning:

   • Develop rolling cash flow forecasts to anticipate liquidity needs.
   • Engage in scenario planning to prepare for downturns or unexpected expenses.

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Medical Analogy Summary

If we consider the company as a patient, WHITE MIRROR STUDIO LTD shows a "healthy heart" with positive net assets (equity), but the "circulatory system" is under strain due to insufficient "blood flow" (cash) to meet immediate demands (current liabilities). The company needs to improve its "circulation" (liquidity) to avoid financial fatigue and ensure smooth day-to-day operations.

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