YELLOW INSIGHTS LIMITED

Executive Summary

Yellow Insights Limited is financially stable but shows early signs of equity erosion that require attention. The company benefits from healthy cash balances and positive working capital but should prioritize improving profitability and maintaining tight credit control to strengthen its financial health and support sustainable growth.

YELLOW INSIGHTS LIMITED - Analysis Report

Company Number: 13113101

Analysis Date: 2025-07-20 11:04 UTC

Financial Health Assessment of Yellow Insights Limited

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1. Financial Health Score: C+

Explanation:
Yellow Insights Limited demonstrates moderate financial stability with positive net assets and working capital but shows signs of declining liquidity and asset value in the most recent year. The company is not in immediate distress but requires attention to cash flow management and debtor collection to strengthen its financial resilience.

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2. Key Vital Signs

Metric	2024 Value (£)	Interpretation
Current Assets	25,688	Healthy level of short-term assets, but down from prior years (37,848).
Cash at Bank	18,524	Reasonable cash balance, increased from prior year (10,922), a positive sign.
Debtors	7,164	Significant reduction from previous year (26,926), suggesting improved collections or reduced sales.
Current Liabilities	14,758	Lower than prior year (18,885), reducing short-term obligations.
Net Current Assets (Working Capital)	10,930	Positive working capital indicates the company can cover short-term debts.
Net Assets	11,602	Positive equity, but decreased from £19,971 in 2023, indicating erosion of reserves.
Tangible Fixed Assets (Net)	830	Small portion of assets tied in fixed assets, depreciating over time.
Share Capital	100	Nominal share capital, typical for small private companies.
Average Employees	2	Very small workforce, reflecting a micro to small company size.

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3. Diagnosis: Symptoms Analysis

• Liquidity and Cash Flow:
  The company maintains a "healthy cash flow" with £18,524 cash on hand, up from the previous year. However, the reduction in debtors from £26,926 to £7,164 could indicate either improved cash collection or a drop in revenue/sales, which requires clarification. The positive net current assets (£10,930) suggest the company comfortably covers its short-term liabilities, a good sign of operational liquidity.

• Profitability and Reserves:
  The decline in net assets and shareholders’ funds from £19,971 to £11,602 signals "symptoms of distress" in retained earnings or profitability. This may reflect operating losses, increased expenses, or one-off charges in the latest year. The profit and loss reserve has diminished accordingly, indicating less buffer for absorbing future shocks.

• Asset Management:
  Fixed assets are minimal and depreciating (£830 net book value), which is typical for a consultancy business with low capital intensity but means the company relies heavily on intangible assets like expertise and client relationships.

• Business Scale and Stability:
  With only two employees and small asset base, Yellow Insights Limited fits within the "Micro" or "Small" category. This scale limits financial flexibility but also keeps overheads low.

• Compliance and Governance:
  The company is up to date with filings and not in liquidation or administration, indicating sound corporate governance and regulatory compliance.

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4. Prognosis and Recommendations

Prognosis:
Yellow Insights Limited is currently solvent and operationally stable but faces risks related to eroding equity and reduced working capital compared to prior years. If the trend of declining net assets continues, the company could experience financial strain. However, the increase in cash reserves is a positive sign and could be leveraged to support growth or buffer short-term pressures.

Recommendations:

1. Improve Revenue Generation / Client Acquisition:
   Investigate the reasons behind the reduced debtors—whether due to fewer sales or better collections—and focus on growing turnover to replenish reserves.

2. Tighten Credit Control:
   Maintain or enhance debtor management to ensure timely cash inflows, preserving liquidity.

3. Cost Control:
   Monitor operating expenses rigorously to prevent further erosion of profit reserves.

4. Strategic Investment:
   Consider investing in marketing or business development within the healthcare consultancy niche to leverage market positioning, especially given the specialist focus on rare disease research.

5. Financial Forecasting:
   Implement rolling cash flow forecasts and scenario planning to anticipate cash needs and avoid liquidity crunches.

6. Explore Funding Options:
   If growth requires capital infusion, evaluate options such as shareholder loans or external financing while maintaining prudent leverage.

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Summary

Yellow Insights Limited maintains a stable financial "pulse" with positive working capital and cash balances, but the decline in net assets signals potential "symptoms of distress" in profitability and equity. Focused efforts on revenue enhancement, cost control, and cash management will be critical to restoring financial robustness and ensuring long-term viability.