ZIG ZAG TRANSFORMATIONS LTD

Executive Summary

Zig Zag Transformations Ltd’s financial health has declined notably in the latest year, with liquidity and equity eroding significantly. While still solvent, the company shows symptoms of financial stress that require immediate attention, particularly in cash flow management and capital reinforcement. Proactive measures can reverse the trend and support sustainable business operations.

ZIG ZAG TRANSFORMATIONS LTD - Analysis Report

Company Number: 13691852

Analysis Date: 2025-07-29 17:24 UTC

Financial Health Assessment of Zig Zag Transformations Ltd (as of 31 March 2024)

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1. Financial Health Score: C

Explanation:
Zig Zag Transformations Ltd shows signs of financial strain compared to prior years, with a noticeable decline in net assets and working capital. While the company remains solvent and operational, the contraction in key balances suggests underlying challenges that require attention to avoid further deterioration. The score "C" reflects a borderline stable condition but with symptoms of distress that warrant proactive management.

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2. Key Vital Signs

Metric	2024 (£)	2023 (£)	Interpretation
Fixed Assets	1,890	2,745	Slight decline; indicates reduced investment or disposal of long-term assets.
Current Assets	Not separately presented in 2024*	3,534	Not explicitly stated in 2024 accounts, but prepayments/accrued income reported.
Prepayments and Accrued Income	7,225	9,313	Decreasing; may suggest less advance income or fewer prepaid expenses.
Current Liabilities	5,540	8,274	Decreased liabilities; positive sign reducing short-term obligations.
Net Current Assets (Working Capital)	1,685	4,573	Significant drop indicates tightening liquidity; less buffer for day-to-day operations.
Total Assets Less Current Liabilities	3,575	7,318	Nearly halved; reflects overall asset reduction net of short-term debts.
Net Assets (Shareholders’ Funds)	2,775	6,518	Marked decline signals erosion in retained earnings or equity base.
Employees (Average)	1	1	Stable small workforce, typical for micro entity.

*The 2024 accounts present prepayments and accrued income distinctly, but current assets (cash, debtors) are not separately disclosed, which is common in micro-entity filings under FRS 105.

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3. Diagnosis

• Liquidity and Working Capital: The sharp decline in net current assets from £4,573 to £1,685 is a key "symptom" of liquidity tightening. This means the company's short-term resources available to cover immediate obligations have reduced significantly, which could lead to operational stress if not managed.

• Equity Erosion: Net assets have dropped from £6,518 to £2,775, indicating that accumulated profits or capital have been partially eroded, possibly due to losses or distributions exceeding earnings. This is a warning sign akin to a patient losing vital strength.

• Asset Base and Operations: Fixed assets and prepayments have decreased, suggesting possible asset sales or reduced upfront expenditures. This could be a strategic reduction in investment or a forced response to cash constraints.

• Company Size and Scale: As a micro-entity with one employee and limited fixed assets, the company's financial flexibility is inherently limited, making it more vulnerable to cash flow fluctuations.

• Compliance and Governance: The company remains active, up to date with filings, and under the control of a single director who holds 75-100% ownership, indicating centralized decision-making but also potential risks if oversight is insufficient.

Overall, the company is in a fragile but not critical state, showing symptoms of financial distress primarily through dwindling liquidity and equity.

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4. Recommendations

To restore and maintain financial health, consider the following specific actions:

• Enhance Cash Flow Management:
  Tighten control on receivables and payables to improve liquidity. Consider negotiating better payment terms with suppliers or accelerating client payments to boost working capital.

• Review Cost Structure:
  Analyze operating expenses carefully to identify non-essential costs that can be reduced or deferred. This will help preserve cash and improve profitability.

• Reassess Asset Utilization:
  Evaluate whether fixed assets are being used efficiently or if further disposals or investments are needed to support revenue generation.

• Capital Injection or Financing:
  If possible, inject additional equity or arrange short-term financing to strengthen the capital base and provide a buffer against cash flow shocks.

• Strategic Business Review:
  Given the decline in net assets and working capital, perform a strategic review to identify growth opportunities or necessary business model adjustments to ensure sustainable profitability.

• Maintain Compliance and Transparency:
  Continue timely filings and maintain clear records. Consider preparing more detailed financial statements if possible to allow better monitoring and stakeholder confidence.

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Medical Analogy Summary

Zig Zag Transformations Ltd is akin to a patient showing signs of weakening vitality — a "healthy pulse" of cash flow has slowed, and reserves have diminished. While not in critical condition, without intervention, the risk of more serious "financial illness" increases. Early diagnosis and treatment focusing on liquidity and capital strengthening can restore the company's financial wellness.

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