Company Number: 14721102

Analysis Date: 2025-07-20 18:38 UTC

Financial Health Assessment for YOVANT LTD as at 31 March 2024

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1. Financial Health Score: Grade D

Explanation:
YOVANT LTD shows signs of early-stage financial strain, with negative net assets indicating liabilities exceed assets. While the company has healthy current assets and positive net current assets (working capital), the presence of substantial long-term creditors causing an overall negative equity position pulls the score down. The company is in its first year of trading, which often involves initial investments and financing that can temporarily depress net asset figures. This grade reflects caution but acknowledges that early operational stages often show such patterns.

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2. Key Vital Signs

Metric	Value (£)	Interpretation
Fixed Assets	824	Minimal investment in long-term assets - typical for a micro IT services company.
Current Assets	149,482	Healthy level of liquid and short-term assets indicating available resources.
Current Liabilities	70,697	Significant short-term debts to be settled within a year, manageable given current assets.
Net Current Assets (Working Capital)	78,785	Positive working capital shows the company can cover short-term obligations comfortably.
Creditors due after one year	122,728	Large long-term liabilities creating financial leverage and risk.
Total Net Assets (Equity)	-43,119	Negative net assets indicate liabilities exceed total assets, a symptom of financial distress.
Shareholders' Funds	-43,119	Negative equity signals that the company owes more than it owns overall.
Number of Employees	2	Small workforce consistent with micro-entity status.

Interpretation:

• The positive working capital is a "healthy pulse," indicating operational liquidity to meet near-term obligations.
• However, large long-term creditors create a "symptom of financial stress," pushing net assets into negative territory.
• Negative equity is like an "unhealthy cholesterol level" — a warning sign that the company is over-leveraged or has accumulated losses.
• The small number of employees aligns with the company's micro-entity classification and early stage.

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3. Diagnosis

YOVANT LTD is a newly incorporated micro-entity operating in IT consultancy and services. The company shows a healthy cash flow position in the short term with current assets exceeding current liabilities by a comfortable margin. This means it can cover immediate debts without distress.

However, the significant long-term liabilities cause an overall negative net asset position. This can be due to startup financing arrangements such as loans or deferred payments. While negative equity is a serious symptom, in the early lifecycle of a company, it may reflect initial investment phases rather than chronic financial illness.

The company has two employees, which is typical for a startup phase, and the director holds full control indicating centralized decision-making.

Overall, the company is in a fragile financial condition but not yet in critical distress. It requires close monitoring and strategic management to improve equity and reduce long-term liabilities.

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4. Recommendations

1. Reduce Long-Term Liabilities:
   Explore refinancing options or negotiate terms to reduce the burden of long-term creditors. This will improve net assets and reduce financial risk.

2. Improve Profitability and Retained Earnings:
   Focus on generating consistent profits to build reserves and strengthen shareholder funds. Early profitability is critical to reversing negative equity.

3. Cash Flow Management:
   Maintain the current healthy working capital by managing receivables and payables effectively to avoid liquidity crunches.

4. Financial Planning and Forecasting:
   Develop detailed cash flow forecasts and financial projections to anticipate future funding needs and avoid surprises.

5. Consider Equity Injection:
   An injection of capital from the owner or investors could improve the balance sheet and provide a buffer against liabilities.

6. Regular Financial Monitoring:
   Conduct quarterly reviews of financial metrics to detect early symptoms of distress and adjust strategies accordingly.

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