ACM WELDING LTD

Executive Summary

ACM WELDING LTD is currently in a financially distressed state, exhibiting negative working capital and shareholders’ funds, signaling liquidity and solvency challenges. While active and compliant, urgent action to strengthen cash flow and capital structure is needed to avoid potential insolvency. Focused financial management and possible capital injection could restore health and sustainability.

ACM WELDING LTD - Analysis Report

Company Number: 13048622

Analysis Date: 2025-07-29 20:32 UTC

Financial Health Assessment: ACM WELDING LTD

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1. Financial Health Score: D

Explanation:
The company exhibits significant financial distress, primarily shown through persistent negative net current assets and shareholders’ funds. While the company is active and compliant with filing deadlines, its balance sheet reveals ongoing liquidity and solvency challenges. This places ACM WELDING LTD in a state akin to a patient with chronic symptoms needing urgent intervention to avoid worsening.

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2. Key Vital Signs

Metric	2023 Value (£)	Interpretation
Fixed Assets	6,000	Small base of long-term investment; stable but minimal
Current Assets	14,232	Cash and receivables; slight improvement vs prior year
Current Liabilities	28,094	Short-term debts; large relative to current assets
Net Current Assets (Working Capital)	-13,862	Negative; company lacks sufficient liquid resources to cover short-term obligations—a symptom of cash flow distress
Total Assets Less Current Liabilities	-7,862	Overall negative net asset position; indicates insolvency risk
Shareholders’ Funds	-7,862	Negative equity; company’s liabilities exceed assets, a critical warning sign

Additional Notes:

• No employees reported; minimal operational scale.
• No audit required due to micro-entity status, but this limits external financial scrutiny.
• Share capital nominal (£1), indicating limited equity buffer.

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3. Diagnosis

The company’s financial "vital signs" indicate it is in a fragile state:

• Liquidity Symptoms: Negative net current assets imply the company cannot comfortably meet short-term obligations with available liquid assets, akin to a patient with poor hydration and electrolyte imbalance. This situation may cause operational strain and raises risk of payment defaults.

• Solvency Symptoms: Negative shareholders’ funds reflect that total liabilities exceed total assets, a classic symptom of balance sheet insolvency. This is comparable to a patient with a severely weakened immune system, vulnerable to shocks like unexpected expenses or revenue shortfalls.

• Operational Activity: The absence of employees and minimal fixed assets suggest limited scale and potentially constrained operational capacity. The slight improvement in current assets versus liabilities from 2022 to 2023 is positive but insufficient to reverse overall distress.

• Compliance and Governance: The company remains active, compliant with filing deadlines, and under the direction of a single director. However, the lack of audit and detailed reporting limits insight into profitability and cash flow dynamics.

Overall, the company is showing symptoms of financial distress and limited resilience. If untreated, these conditions could lead to financial "collapse" such as insolvency proceedings or forced restructuring.

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4. Recommendations

To improve financial wellness and stabilize the company’s condition, the following actions are advisable:

1. Strengthen Liquidity:

   • Seek short-term financing or equity injections to cover immediate liabilities and restore positive working capital.
   • Improve cash flow management by accelerating receivables collection and negotiating extended payment terms with creditors.

2. Enhance Capital Structure:

   • Consider raising additional share capital or attracting investors to bolster equity and reduce insolvency risk.
   • Explore debt restructuring options to spread out liabilities and ease short-term pressure.

3. Operational Review:

   • Assess business model viability and identify opportunities to increase revenue or reduce costs.
   • Explore partnerships, subcontracting, or outsourcing to maintain operational capacity without increasing fixed costs.

4. Financial Monitoring:

   • Implement regular internal financial reporting to detect early warning signs of distress.
   • Engage professional advice for detailed cash flow forecasting and scenario planning.

5. Compliance and Transparency:

   • Though audit exemption applies, consider voluntary external financial reviews to improve credibility and stakeholder confidence.

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