Company Number: 14152505

Analysis Date: 2025-07-29 14:15 UTC

Financial Health Assessment of AA & B LIVING LIMITED as at 30 June 2024

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1. Financial Health Score: C

Explanation:
AA & B LIVING LIMITED shows some signs of recovery and stability but remains fragile. The company has moved from a net liabilities position in 2023 to positive net assets in 2024, which is a positive sign. However, tight working capital and relatively low equity compared to liabilities indicate underlying vulnerability. This score reflects a cautious outlook with an improving trend but still with areas that require attention to ensure long-term financial health.

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2. Key Vital Signs

Metric	2024 (£)	Interpretation
Fixed Assets	4,316	Small fixed asset base typical for micro entity; indicates limited capital investment.
Current Assets	4,899	Moderate short-term resources; improved from prior year, indicating better liquidity management.
Current Liabilities	0	(Not explicitly stated in 2024, but net current assets shown as 4,899); suggests current liabilities are low or effectively managed.
Net Current Assets	4,899	Positive working capital ("healthy cash flow buffer") supporting short-term operational needs.
Creditors > 1 year (Long-term liabilities)	8,727	High long-term liabilities relative to assets; potential "chronic condition" if not managed carefully.
Net Assets (Shareholders’ Funds)	518	Small but positive equity base; a significant improvement from prior year’s negative equity (-1,069).
Average Employees	3	Small workforce consistent with micro entity status.

Additional Observations:

• The company moved from negative net assets in 2023 to positive net assets in 2024, suggesting an effective effort to reduce losses or increase capital.
• The fixed asset base decreased slightly, which could reflect disposals or depreciation, while current assets nearly quadrupled, indicating improved liquidity.
• Long-term creditors remain substantial compared to net assets, indicating a high financial leverage ratio, which can be risky if earnings or cash flows weaken.

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3. Diagnosis: Financial Condition Overview

AA & B LIVING LIMITED is currently in a state of cautious recovery. The significant improvement from negative equity to positive net assets is akin to a patient showing signs of recovery after a period of financial distress. The "symptoms" included prior negative equity and relatively high long-term debt, which posed a risk to solvency.

The current positive net working capital ("healthy cash flow") suggests the company can meet its short-term obligations, which is a critical sign of operational stability. However, the elevated long-term liabilities relative to assets represent an underlying "chronic condition" that requires ongoing management to avoid relapse into financial distress.

The company’s small scale, micro entity status, and limited asset base mean it has minimal financial reserves, making it vulnerable to unexpected shocks or downturns in its sectors (sports activities and real estate letting/sales).

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4. Recommendations for Financial Wellness Improvement

1. Strengthen Equity Base:
   Consider capital injections or retained earnings strategies to build a more robust equity cushion. This will improve solvency ratios and investor confidence.

2. Manage Long-term Liabilities:
   Engage with creditors to restructure or refinance long-term debt to more manageable terms, reducing financial strain and interest burdens.

3. Enhance Cash Flow Monitoring:
   Maintain and improve working capital management to ensure liquidity remains healthy. This includes efficient debtor collection and inventory management.

4. Cost Control and Revenue Growth:
   Explore opportunities to increase revenue streams within core SIC activities and control operational costs to improve profitability and retained earnings.

5. Financial Planning and Forecasting:
   Implement regular financial health check-ups and scenario planning to anticipate and mitigate risks, ensuring the business remains on a positive recovery trajectory.

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