2426CLIFTON LIMITED

Executive Summary

2426CLIFTON LIMITED is currently facing significant financial stress, demonstrated by persistent negative working capital and shareholders’ funds, indicating liquidity challenges and accumulated losses. Immediate focus on improving cash flow, restructuring liabilities, and operational efficiency is critical to stabilizing the company’s financial health and preventing further deterioration.

2426CLIFTON LIMITED - Analysis Report

Company Number: 12445560

Analysis Date: 2025-07-29 19:24 UTC

Financial Health Assessment of 2426CLIFTON LIMITED

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1. Financial Health Score: D

Explanation:
The company is showing clear symptoms of financial distress, primarily due to persistent negative net current assets and shareholders’ funds over the past four years. Despite some growth in current assets, liabilities have grown faster, leading to worsening working capital deficits. This score reflects a concerning financial condition requiring prompt attention.

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2. Key Vital Signs

Metric	2024 Value (£)	Interpretation
Current Assets	1,058,824	Reasonably healthy level of liquid and short-term assets
Cash	146,570	Moderate cash on hand; some liquidity but insufficient for liabilities
Current Liabilities	1,523,747	High short-term debts, puts pressure on liquidity
Net Current Assets (Working Capital)	-464,923	Negative working capital indicates liquidity crunch
Shareholders’ Funds (Equity)	-464,923	Negative equity signals accumulated losses, eroding company value
Stock (Inventory)	912,204	High stock levels tie up capital, may be a liquidity risk
Debtors	50	Minimal receivables, low immediate incoming cash flow

Interpretation:

• The company’s negative working capital is a key symptom of distress, showing that current liabilities exceed current assets by nearly half a million pounds. This indicates potential difficulty meeting short-term obligations—a "cash flow blockage" analogous to arterial blockage in a patient’s circulatory system.
• Despite a decent amount of stock (inventory), the low debtor balance suggests limited immediate inflows, restricting cash generation.
• Increasing current liabilities year-on-year, largely owed to connected companies and other creditors, may indicate reliance on related parties for short-term financing, which could be unsustainable.
• Negative shareholders’ funds reflect cumulative losses, indicating the company is "underweight" financially and potentially insolvent on a net asset basis.

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3. Diagnosis

2426CLIFTON LIMITED is experiencing financial strain characterized by liquidity challenges and erosion of equity capital. The company’s balance sheet shows signs typical of a business in distress:

• Persistent negative net current assets indicating that the company's short-term debts outweigh its liquid assets.
• High inventory levels relative to cash and debtors, which may be tying up funds in stock that is not yet converted into cash.
• Negative shareholders’ funds, a chronic symptom of accumulated losses or ongoing operational deficits.
• The company relies heavily on amounts owed to connected companies and other creditors for funding, which suggests dependency on insider financing rather than sustainable operational cash flow.

This financial "symptomology" suggests the company is not generating sufficient operating cash flow to meet its obligations, akin to a patient whose vital signs point to a chronic health condition requiring intervention.

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4. Recommendations

To improve the financial wellness of 2426CLIFTON LIMITED, the following actions are advised:

• Improve Liquidity Management:

  • Accelerate conversion of inventory into sales and cash to relieve the working capital crunch.
  • Tighten credit control to increase debtor balances and improve cash inflows.
  • Explore short-term financing options to cover immediate liabilities, but cautiously to avoid exacerbating debt burden.

• Restructure Liabilities:

  • Negotiate with creditors, especially connected companies, to extend payment terms or convert short-term liabilities into longer-term debt.
  • Consider equity injections or capital restructuring to restore positive net assets.

• Operational Efficiency:

  • Review business model and cost structure to address underlying profitability issues causing losses.
  • Focus on core activities generating positive cash flow and reduce or dispose of underperforming assets.

• Financial Reporting and Monitoring:

  • Maintain timely and accurate financial reporting to monitor these "vital signs" closely.
  • Engage professional advice for turnaround strategies if necessary.

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