AAFD LTD

Executive Summary

AAFD LTD demonstrates weak financial health characterized by negative net assets and a heavy long-term debt burden. The company’s limited liquidity and absence of retained earnings pose significant risk to credit repayment capability. Credit facilities are not recommended without substantial financial restructuring or capital support to improve solvency and cash flow.

AAFD LTD - Analysis Report

Company Number: 12798523

Analysis Date: 2025-07-20 16:48 UTC

1. Credit Opinion: DECLINE
   AAFD LTD’s financial statements reveal a weak balance sheet with net liabilities of approximately £90,725 as at 31 December 2023. The company shows negative net assets primarily due to significant long-term liabilities (£322,252) exceeding fixed assets (£230,224) and minimal current assets (£2,177). The current liabilities are low (£874), but the large non-current liabilities suggest a heavy debt burden that the company may struggle to service. There is no indication of profitability or retained earnings to support debt repayment. Given the negative equity position and limited liquidity, the company currently lacks sufficient financial strength to reliably service new credit facilities.

2. Financial Strength:
   The company holds fixed assets valued at £230k, but these are largely offset by long-term liabilities exceeding £320k, leading to a net negative equity position. The net current assets are positive but very modest (£1,303), indicating minimal working capital. The balance sheet shows no growth or improvement over the last two years, with net assets declining slightly from £92,342 in 2022 to £90,725 in 2023. The company’s micro-entity status and low employee count (2 staff) imply a small-scale operation. The negative equity and persistent high liabilities suggest financial fragility and limited capital buffer.

3. Cash Flow Assessment:
   Current assets consist mainly of £2,177 in cash or equivalents, with current liabilities at just £874, resulting in a small positive working capital position. However, the overall liquidity is constrained given the significant long-term liabilities. No detailed cash flow statements are provided, but the limited current assets relative to large debt imply weak cash flow generation capacity. The company’s ability to meet short-term obligations appears sufficient but servicing long-term debt and funding operations may be challenging without additional capital or improved profitability.

4. Monitoring Points:

• Track changes in net assets and equity position to assess if liabilities are being reduced.
• Monitor liquidity ratios, especially current ratio and quick ratio, to ensure ongoing ability to meet short-term obligations.
• Watch for any improvements in cash flow from operations or new equity injections.
• Review debt servicing performance and any covenant compliance if credit is extended.
• Observe any changes in fixed asset values or disposals that could impact security value.
• Keep an eye on director conduct and company filings for timely submission and governance.