ABC CONSULTING LTD

Executive Summary

ABC Consulting Ltd demonstrates a deteriorating financial position with significant negative net assets and heavy reliance on director loans, impairing its ability to service debt sustainably. Liquidity appears weak given low cash balances relative to liabilities, and debtor recoverability is uncertain. Without evidence of improving profitability or stronger capital support, the company presents a high credit risk.

ABC CONSULTING LTD - Analysis Report

Company Number: 13138859

Analysis Date: 2025-07-20 15:49 UTC

1. Credit Opinion: DECLINE. ABC Consulting Ltd shows significant net liabilities and negative shareholders’ funds that have deteriorated over the last three years, indicating poor financial health. The company relies heavily on director loan accounts (£115,000) which represent long-term liabilities, raising concerns about the sustainability of its capital structure and its ability to service debt from operating cash flows. Current liabilities exceed cash on hand by a wide margin, and the net current assets figure appears overstated relative to the stated current liabilities, possibly due to inclusion of non-liquid debtors or deferred tax assets not readily realizable. The absence of audited accounts and no statement of income and retained earnings further limit transparency and confidence in financial stewardship.

2. Financial Strength: The balance sheet reveals increasing net liabilities from £-33,241 in 2021 to £-87,199 in 2024, driven largely by rising director loan accounts (from £79,000 to £115,000). Share capital is minimal at £100, and retained earnings are deeply negative. Current assets increased mainly due to debtors and deferred tax assets, but cash balances declined significantly (£3,638 in 2023 to £1,144 in 2024), indicating deteriorating liquidity. The company’s solvency is weak as total liabilities exceed total assets by a substantial margin, and net assets remain negative. This signals an ongoing capital deficit and reliance on creditor support.

3. Cash Flow Assessment: Cash at bank is low (£1,144) and insufficient to cover current liabilities (£1,920). Debtors form a large portion of current assets (£28,577), but their collectability and liquidity are uncertain. The net current assets figure of £27,801 conflicts with the sum of current assets minus current liabilities, suggesting misclassification or inclusion of deferred tax assets which cannot be converted to cash quickly. The company’s working capital position is fragile, and there is a risk of cash flow shortfalls impacting operational continuity. The reliance on director loans as a form of financing rather than trade creditors indicates constrained external funding options.

4. Monitoring Points:

• Track changes in director loan balances and any repayments or additional advances.
• Monitor debtor aging and cash collection effectiveness to verify liquidity assumptions.
• Review upcoming filings, especially for any audited accounts or profit and loss disclosures.
• Watch for any signs of operational profitability or improved cash flows in future periods.
• Observe any changes in management or ownership structure that could impact financial support.
• Monitor compliance with filing deadlines and any indication of financial distress or restructuring.