AD HAULAGE LTD

Executive Summary

AD HAULAGE LTD currently exhibits a stable asset base and growing shareholder equity but faces liquidity challenges due to negative working capital and increased short-term liabilities. Immediate focus on improving cash flow and managing short-term debts is essential to maintain financial health and support ongoing operations. With appropriate measures, the company's outlook can improve significantly.

AD HAULAGE LTD - Analysis Report

Company Number: 12650620

Analysis Date: 2025-07-20 16:25 UTC

Financial Health Assessment: AD HAULAGE LTD (as at 30 June 2024)

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1. Financial Health Score: C

Explanation:
The company shows some positive traits such as an improving net asset base and stable fixed assets, but the sharp decline in current assets coupled with elevated current liabilities and long-term creditors signals caution. This indicates an underlying liquidity strain, which tempers the overall financial health score to a moderate C grade.

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2. Key Vital Signs

Metric	2024 Value	2023 Value	Interpretation
Fixed Assets	£59,829	£53,136	Stable and slightly growing asset base indicating ongoing investment or asset maintenance.
Current Assets	£13,283	£40,152	Significant drop reflects reduced cash or receivables, a symptom of tight liquidity.
Current Liabilities	£35,658	£30,261	Increased short-term debts pose a pressure on immediate cash flow.
Net Current Assets (Working Capital)	-£22,375	£9,891	Shift to negative working capital signals potential cash flow distress and difficulty meeting short-term obligations.
Creditors (Long-term)	£10,843	£45,369	Reduction in long-term debt is positive, reducing future repayment burden.
Net Assets (Shareholders' Funds)	£26,611	£17,658	Growth in net assets indicates retained earnings or capital injections, strengthening the equity base.

Vital Sign Interpretation:

• The negative working capital is the most alarming vital sign. It suggests the company may struggle to pay off its upcoming debts without generating additional cash flow or refinancing.
• The increase in current liabilities alongside a sharp decline in current assets is a symptom of liquidity stress.
• However, the steady fixed assets and growth in net assets show the company is maintaining its asset base and equity, which is a healthier sign of business stability and potential for recovery.

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3. Diagnosis

AD HAULAGE LTD displays symptoms akin to a patient with a "healthy skeleton" (fixed assets and equity base) but "circulatory issues" manifesting as liquidity constraints. The drop in current assets and rise in current liabilities means the business might experience cash flow difficulties in the short term, risking delayed payments or reliance on external financing.

The reduction in long-term creditors is a good sign, possibly reflecting debt repayments or restructuring, which should alleviate future pressures. The shareholder equity increase suggests retained profits or capital injections, improving the company’s resilience.

Overall, the financial condition is stable but under strain. The company has not shown signs of insolvency or distress severe enough to threaten ongoing operations but needs to address the working capital deficiency promptly.

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4. Recommendations

1. Improve Liquidity Management:

   • Tighten credit control to accelerate receivables collection.
   • Manage inventory or other current assets efficiently to free up cash.
   • Negotiate better payment terms with suppliers to extend payables without harming relationships.

2. Short-Term Financing:

   • Consider short-term credit facilities or overdrafts to bridge liquidity gaps.
   • Explore invoice financing or factoring if receivables are significant and slow-paying.

3. Cost Control:

   • Review operating costs to reduce cash outflows.
   • Postpone non-essential capital expenditures to conserve cash.

4. Regular Financial Monitoring:

   • Implement monthly cash flow forecasting to anticipate liquidity issues early.
   • Monitor key ratios such as current ratio and quick ratio regularly.

5. Strategic Planning:

   • Explore revenue growth opportunities to increase cash inflows.
   • Maintain strong communication with stakeholders, especially creditors and investors.

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