WSM CONSULTANCY LTD

Executive Summary

WSM CONSULTANCY LTD currently faces financial challenges characterized by negative working capital and declining net assets, indicating liquidity pressures and capital deficiencies. Immediate actions to improve cash flow, strengthen capital reserves, and manage costs are essential to restore financial health and sustainability. Without intervention, the company risks worsening financial distress despite maintaining active operations.

WSM CONSULTANCY LTD - Analysis Report

Company Number: 12933260

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

Financial Health Assessment Report for WSM CONSULTANCY LTD

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1. Financial Health Score: D

Explanation:
The company’s financial health shows significant warning signs. The persistent negative net current assets and declining net assets indicate financial distress. While the company remains active, the balance sheet exhibits symptoms of liquidity strain and capital deficiency, meriting a below-average grade.

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2. Key Vital Signs

Metric	2023 (£)	2022 (£)	Interpretation
Fixed Assets	14,000	14,000	Stable investment in long-term assets; no impairment noted.
Current Assets	2,501	2,501	Very low short-term asset base, limits liquidity options.
Current Liabilities	16,844	16,483	High short-term obligations, slightly increasing.
Net Current Assets	-14,343	-13,982	Negative working capital indicates potential cash flow issues.
Total Assets Less Current Liabilities	-343	18	Slight deterioration from positive to negative net assets.
Net Assets	-702	-342	Negative equity shows accumulated losses or insufficient capital.
Shareholders’ Funds	-702	-342	Reflects owners’ stake; negative value signals financial distress.

Interpretation of Vital Signs:

• "Healthy cash flow" is reflected by positive net current assets, which WSM CONSULTANCY LTD lacks, suggesting difficulty in meeting short-term liabilities.
• The negative net assets and shareholders' funds are like a patient with "low vital reserves," indicating the company has been consuming more resources than generating equity.
• The fixed assets remain constant, which is a positive sign, but they do not offset the liquidity and solvency symptoms.

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3. Diagnosis

WSM CONSULTANCY LTD exhibits symptoms of financial distress, primarily driven by negative working capital and shrinking net assets. The persistent negative net current assets reveal the company may struggle to cover short-term debts with available liquid assets, indicating "cash flow congestion." The negative shareholders’ funds suggest accumulated losses or insufficient capital injection, akin to a patient with an eroding immune system.

However, the company is still operating (active status), and no overdue filings or liquidation processes are underway, which reflects some operational continuity. The micro-entity reporting and zero employees suggest a lean operational model, but this has not prevented financial strain.

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4. Recommendations

To improve financial wellness, the company should consider the following actions:

• Improve Liquidity ("Boost Vital Fluids"):

  • Seek short-term financing or increase cash reserves to meet current liabilities promptly.
  • Review payment terms with creditors and debtors to optimize cash flows.

• Capital Injection ("Strengthen Immune Response"):

  • Consider shareholder loans or equity injections to restore positive net assets and shareholder funds balance.
  • Evaluate whether the current capital structure is adequate for business needs.

• Cost Management ("Reduce Metabolic Stress"):

  • Analyze overheads and operating expenses to identify potential cost reductions.
  • Given no employees, examine other operational costs critically.

• Strategic Review ("Medical Imaging"):

  • Conduct a thorough review of business model viability and revenue generation to ensure sustainability.
  • Explore new client acquisition or service diversification to improve income streams.

• Regular Financial Monitoring ("Vital Signs Checks"):

  • Establish monthly cash flow forecasts and financial dashboards for early detection of distress signals.

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