ADE-OLA CONSULTING LIMITED

Executive Summary

ADE-OLA CONSULTING LIMITED is a very young company with early-stage financial strain characterized by negative working capital and net liabilities. The business is highly dependent on director funding and has yet to generate significant revenue. Immediate focus on improving cash flow, managing liabilities, and securing additional capital will be crucial to strengthening its financial health and ensuring future viability.

ADE-OLA CONSULTING LIMITED - Analysis Report

Company Number: 14554259

Analysis Date: 2025-07-20 11:24 UTC

Financial Health Assessment: ADE-OLA CONSULTING LIMITED

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1. Financial Health Score: D

Explanation:
The company shows early-stage operational activity with negative net assets and shareholders’ funds, indicating initial financial stress. The negative working capital and net liabilities suggest liquidity challenges, but given the company’s recent incorporation (December 2022) and the nature of start-ups, this is not unusual yet requires close monitoring and corrective action.

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2. Key Vital Signs

Metric	Value (£)	Interpretation
Fixed Assets	656	Minimal investment in long-term assets, typical for a new business.
Current Assets	17,168	Entirely cash, indicating no receivables or inventory - good liquidity on hand.
Current Liabilities	17,895	Slightly exceeds current assets, leading to negative working capital.
Net Current Assets	-727	Indicates short-term liquidity strain; liabilities exceed assets slightly.
Total Assets Less Current Liabilities	-71	Overall, liabilities slightly exceed assets — early symptom of distress.
Net Assets / Shareholders' Funds	-71 / -171	Negative equity reflects accumulated losses or loans, warning sign for solvency.
Director’s Loan Account	17,175	Significant reliance on director funding indicates external financing rather than operational cash generation.

Interpretation of Vital Signs:

• The negative net current assets and net liabilities suggest the company’s "financial pulse" is weak, with more short-term obligations than liquid resources.
• The director’s loan is a crucial lifeline, but dependence on this may limit future financial flexibility and presents a symptom of underlying cash flow issues.
• The absence of turnover data in the accounts implies limited or no revenue generation yet, a common early-stage symptom.

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3. Diagnosis

ADE-OLA CONSULTING LIMITED is in the nascent stage of its business lifecycle, having operated for just over one year. The financial statements reveal:

• Symptom of liquidity strain: Negative working capital (-£727) suggests the company currently cannot fully cover short-term liabilities from its short-term assets. This is a mild but important symptom requiring attention.
• Solvency concerns: Negative net assets and shareholders' funds indicate the company’s accumulated losses or funding structure have eroded equity below zero. This points to an early-stage financial distress symptom, often seen in start-ups before they achieve sustainable profits.
• Funding dependency: Heavy reliance on a director’s loan (£17,175) as a primary funding source signals a lack of external financing or internal cash generation. While this is common in start-ups, it heightens risk if the director cannot continue support.
• No audit requirement: The company is small and has taken advantage of audit exemptions, which is normal but means less external scrutiny of financial health.

Overall, the company’s financial health is fragile but not critical. The “patient” is in early development, with symptoms suggesting the need for improved cash flow management and capital infusion.

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4. Recommendations

To improve financial wellness and build a healthy financial foundation, ADE-OLA CONSULTING LIMITED should consider the following actions:

• Enhance Cash Flow Generation: Focus on accelerating revenue streams and reducing reliance on director loans. Exploring new contracts, clients, or service offerings in the "Other human health activities" sector could increase turnover.
• Control Short-Term Liabilities: Negotiate longer payment terms with creditors or reduce accruals to balance working capital and avoid liquidity crunches.
• Capital Injection or Equity Funding: Consider additional equity investments or external funding to improve the capital base and reduce negative net assets, thereby strengthening solvency.
• Monitor Financial Metrics Regularly: Establish monthly cash flow forecasts and working capital analysis to detect early warning signs and adjust operations promptly.
• Cost Control: Keep fixed costs low and manage expenses carefully to preserve cash reserves during growth phases.
• Professional Financial Advice: Engage with a financial advisor or accountant to plan tax-efficient funding and optimize the balance sheet structure.

By addressing these areas, the company can transition from its current fragile condition to a more stable and sustainable financial position.

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