ADXLABS LLP

Executive Summary

ADXLABS LLP shows poor financial health characterized by negative working capital and net assets, increasing member loans, and negligible cash reserves, indicating liquidity and solvency challenges. Immediate actions to improve cash flow, reduce debt reliance, and optimize asset use are essential to stabilize the business and improve its financial prognosis.

ADXLABS LLP - Analysis Report

Company Number: OC437236

Analysis Date: 2025-07-29 20:19 UTC

Financial Health Assessment for ADXLABS LLP (as of 31 May 2024)

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1. Financial Health Score: D (Poor)

Explanation:
ADXLABS LLP’s financial metrics indicate significant distress. The company has persistent net current liabilities (negative working capital), negative net assets, and increasing member loans classified as debt. These "symptoms" suggest poor liquidity and solvency, akin to a patient with chronic illness and weakened vital signs. The company is at risk of financial strain without intervention.

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2. Key Vital Signs

• Current Assets: £255 (2024) down from £4,122 (2023)
  Interpretation: Drastic reduction in liquid and short-term assets, indicating poor cash availability and inability to cover short-term obligations.

• Current Liabilities: £8,165 (2024), reduced from £11,995 (2023)
  Interpretation: High short-term debts remain, though slightly reduced, still far exceeding current assets.

• Net Current Assets (Working Capital): -£7,910 (2024)
  Interpretation: Indicates a "symptom of distress" — the company’s short-term liabilities exceed its liquid assets by a large margin, signaling liquidity challenges.

• Net Assets: -£3,083 (2024), down from -£1,839 (2023)
  Interpretation: Negative net worth shows that total liabilities exceed total assets, a sign of insolvency risk.

• Shareholders Funds: £28,234 (2024), increased from £18,947 (2023)
  Interpretation: This figure represents members' interests excluding the loans classified as debt. The increase shows some growth in members' equity, but overshadowed by high member loans.

• Loans and Other Debts Due to Members: -£31,317 (2024), up from -£20,786 (2023)
  Interpretation: Members have injected significant funds as loans, which are liabilities to the LLP, indicating reliance on internal financing to sustain operations.

• Tangible Fixed Assets: £4,827 (2024), reduced from £6,034 (2023)
  Interpretation: Depreciation has reduced asset base; no new fixed assets acquired, limiting capacity for operational growth.

• Cash at Bank: Nil (2024), from £31 (2023)
  Interpretation: Practically no cash on hand, a critical "vital sign" indicating poor liquidity and difficulty meeting immediate obligations.

• Employees: 0
  Interpretation: No employees reported, suggesting a micro-operation or possibly inactivity which may impact revenue generation.

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3. Diagnosis

ADXLABS LLP displays classic symptoms of financial distress:

• Liquidity Crisis: The company's current liabilities vastly exceed current assets, meaning it struggles to pay off short-term debts. This is equivalent to a patient with dangerously low blood pressure — immediate attention is needed.

• Solvency Concerns: Negative net assets and net current liabilities mean the company owes more than it owns, akin to a weakened heart unable to pump effectively, risking collapse if conditions persist.

• Dependence on Member Loans: Increasing loans from members suggest the business is relying on internal funding injections to stay afloat rather than generating sustainable cash flow from operations.

• Asset Erosion: Declining tangible fixed assets with no replenishment may limit the company’s capacity to generate future revenue.

• No Employees: The absence of employees might indicate minimal business activity, which could either be deliberate (outsourcing, automation) or a sign of shrinking operations.

Overall, the financial health is poor, with significant risk of insolvency if the negative trends continue. The company is in a fragile state, requiring urgent intervention to restore financial vitality.

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4. Recommendations

• Improve Liquidity:

  • Increase cash reserves by accelerating debtor collections or securing external short-term financing.
  • Negotiate extended payment terms with creditors to ease immediate cash outflows.

• Reduce Reliance on Member Loans:

  • Convert some member loans to equity if possible to improve solvency ratios.
  • Seek external investors or loans on more favourable terms to diversify funding sources.

• Cost Control & Revenue Generation:

  • Review and reduce overheads aggressively.
  • Explore new revenue streams or increase sales efforts to generate cash inflows.

• Asset Management:

  • Assess fixed assets for sale or leaseback opportunities to raise cash.
  • Avoid further depreciation through maintenance and consider reinvestment if financially viable.

• Financial Monitoring:

  • Implement robust cash flow forecasting and financial controls to detect and manage symptoms early.
  • Engage financial advisors to restructure debts and improve financial planning.

• Legal and Compliance Check:

  • Ensure all filings are timely to avoid penalties which could worsen financial strain.

Taking these measures is analogous to prescribing medication and lifestyle changes for a patient with chronic illness to restore health and prevent collapse.

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