ADA AND ASSOCIATES LIMITED

Executive Summary

ADA AND ASSOCIATES LIMITED is a newly formed property development company showing early signs of financial strain with negative working capital and shareholders' funds. While the company holds significant stock in development projects, its very low cash balance and high short-term liabilities present liquidity risks. Timely action to improve cash flow and inject capital is critical to restore financial health and support ongoing operations.

ADA AND ASSOCIATES LIMITED - Analysis Report

Company Number: 15003899

Analysis Date: 2025-07-29 13:54 UTC

Financial Health Assessment for ADA AND ASSOCIATES LIMITED

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1. Financial Health Score: D (At Risk)

Explanation:
This company shows early warning signs of financial strain, with net current liabilities and negative shareholders' funds. Given it is newly incorporated (July 2023) and has no audit requirement, the financial data is limited but still indicates vulnerability. The small capital base (£6 share capital) and negative working capital imply that the company may face liquidity challenges without prompt corrective action.

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2. Key Vital Signs

Metric	Value (£)	Interpretation
Current Assets	400,929	Reasonably strong, mainly stock (development property) indicating business activity in progress.
Cash at Bank	2,017	Very low cash balance—symptom of tight liquidity or cash flow stress.
Debtors	8,597	Low receivables, consistent with early-stage business or limited sales to date.
Current Liabilities	401,797	High short-term debt obligations, slightly exceeding current assets—warning sign.
Net Current Assets	-868	Negative working capital ("symptom of distress")—current liabilities slightly exceed current assets.
Shareholders’ Funds	-871	Negative equity indicates accumulated losses or initial funding shortfall, risky financial health.
Stock (Work in Progress)	390,315	Large stock holding tied up in development projects, potentially illiquid.

Additional Context:

• The company is classified as a small private limited company engaged in "Development of building projects" (SIC 41100).
• There are no employees, suggesting operations may rely on contractors or directors.
• Directors affirm going concern basis due to their financial support commitment.

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3. Diagnosis

Underlying Financial Condition:
ADA AND ASSOCIATES LIMITED is in its infancy (just over 1 year old) and is actively involved in property development projects, as evidenced by significant stock levels representing development and construction in progress. However, the company’s cash reserves are minimal relative to its liabilities, creating a "cash flow deficit" symptom that could impair its ability to meet short-term obligations.

The negative net current assets and shareholders' funds indicate the company is currently operating with a slight working capital deficiency and has likely absorbed initial losses or incurred development costs exceeding initial capital and funding. This is not unusual for a start-up in the property development sector where significant upfront investment occurs before sales and revenue realization.

However, the financial "vital signs" suggest the company is close to a tipping point: without timely cash inflows or additional capital injections, it risks liquidity strain. The directors’ commitment to provide financial support is a critical lifeline ("financial life support"), but reliance on this underscores the fragile financial health.

The departure of one director in November 2024 should be noted but does not directly affect financial health unless it impacts management capability.

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4. Recommendations

Immediate Actions:

• Improve Cash Flow Management: Boost cash reserves by accelerating sales or securing short-term financing. A "healthy cash flow" is essential to cover current liabilities and avoid insolvency risk.
• Review Stock Valuation and Liquidity: Confirm the recoverability of the large stock balance (work in progress) to ensure no impairment is needed. Consider strategies to convert stock into cash promptly.
• Capital Injection: Consider additional equity funding or director loans to strengthen shareholders’ funds and working capital, reducing financial stress symptoms.
• Cost Control: Maintain strict control over expenses and delay non-essential outflows to preserve liquidity.
• Monitor Creditors and Debtors: Negotiate longer payment terms with creditors and expedite debtor collections to improve net current asset position.
• Prepare for Future Reporting: Given the growing complexity, ensure timely and accurate accounting records and consider external financial advice or audit in the future for transparency and stakeholder confidence.

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Summary:
ADA AND ASSOCIATES LIMITED shows typical early-stage challenges of a property development start-up with substantial stock investment but minimal cash and slight working capital deficit. The company currently depends on director support to maintain operations and must focus on improving liquidity and financial resilience to avoid distress.

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