AFH ACCOUNTANTS & CO (MRC) LTD

Executive Summary

AFH ACCOUNTANTS & CO (MRC) LTD faces financial fragility marked by a steep decline in net assets and emerging liabilities, signaling early distress symptoms. Immediate focus on liquidity improvement, capital reinforcement, and operational efficiency is essential to restore financial health and secure future viability.

AFH ACCOUNTANTS & CO (MRC) LTD - Analysis Report

Company Number: 12700428

Analysis Date: 2025-07-20 17:19 UTC

Financial Health Assessment Report: AFH ACCOUNTANTS & CO (MRC) LTD

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1. Financial Health Score: D

Explanation:
The company shows signs of financial strain indicated by a sharp deterioration in net assets and liquidity over the latest financial year. While still solvent, the drastic drop from £100 net assets in 2023 to just £18 in 2024 and emergence of current liabilities suggests symptoms of distress. As a micro-entity with minimal assets and no employees, the financial cushion is very thin, warranting caution.

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2. Key Vital Signs (Critical Metrics):

Metric	2024 Value	Interpretation
Net Assets (Shareholders’ Funds)	£18	Critically low; sharp decline from £100 in prior year indicates erosion of equity base.
Current Liabilities	£82	Presence of current liabilities where none existed previously signals emerging short-term obligations.
Net Current Assets	-£82	Negative working capital suggests potential liquidity challenges to meet immediate debts.
Share Capital	£300	Minimal capital base typical for micro-entities; limited buffer against losses.
Employees	0	No employees, implying low operating costs but also no internal capacity for growth or revenue generation.
Company Status	Active	Company is operational with no liquidation or administration processes underway.

Interpretation:
The vital signs resemble a patient with a weakened immune system: the company's financial reserves have diminished significantly, and it now carries liabilities without sufficient liquid assets as a buffer. Negative net current assets are a red flag — akin to a patient showing early symptoms of distress due to insufficient resources to cover short-term obligations.

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3. Diagnosis:

• Financial Condition: The company is currently solvent but financially fragile. The fact that net assets have dropped from £100 to £18 in one year, combined with the appearance of £82 in current liabilities, indicates a recent deterioration in financial health. The absence of employees and minimal share capital limits operational flexibility.

• Underlying Causes: The decline in net assets likely reflects either operational losses, increased liabilities, or a combination of both. The lack of detailed profit and loss data limits pinpointing exact cause but the balance sheet signals reduced financial strength.

• Governance and Control: The company has undergone recent changes in directorship and significant control, which could influence strategic direction and financial decisions. The current director and controlling shareholder is Mr. Amar Algohar, appointed recently (April 2025), possibly reflecting a management transition.

• Operational Outlook: Being a micro-entity in tax consultancy and accounting services, the firm operates in a competitive, low-margin industry. Without employees, growth prospects may be constrained unless new personnel or resources are introduced.

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4. Recommendations:

1. Immediate Cash Flow Management:

   • Prioritize improving liquidity to address negative net current assets. Strategies may include negotiating payment terms with creditors, accelerating receivables (if any), or injecting working capital.

2. Capital Injection or Financing:

   • Consider bringing in additional equity or obtaining short-term financing to rebuild net assets and provide a financial buffer.

3. Operational Review:

   • Conduct a thorough review of expenses and revenue streams. With no employees, the company may rely heavily on directors or outsourced services—evaluate cost efficiency.

4. Strategic Planning:

   • Develop a clear business plan to improve profitability and financial stability, possibly including client acquisition, service diversification, or partnerships.

5. Monitoring and Reporting:

   • Implement more frequent financial monitoring to detect early signs of financial distress, enabling proactive management.

6. Director Engagement:

   • The new director should ensure compliance with statutory requirements and consider seeking professional financial advice to stabilize the company.

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Medical Analogy Summary:
The company currently exhibits early symptoms of financial distress akin to a patient with a weakened vital sign—low net assets and liquidity deficits—requiring urgent intervention to prevent further deterioration. With timely care through capital support and operational adjustments, prognosis can improve.

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