Company Number: 12695052

Analysis Date: 2025-07-20 18:26 UTC

Financial Health Assessment for Aharon Limited (as of 30 June 2024)

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1. Financial Health Score: D

Explanation:
Aharon Limited exhibits significant signs of financial distress, marked by persistent net current liabilities, negative net assets, and declining fixed assets. The company’s working capital is deeply negative, indicating a "symptom of distress" akin to a patient suffering from poor circulation—funds are insufficient to meet short-term obligations. This grade reflects the urgent need for intervention to restore financial stability.

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2. Key Vital Signs

Metric	Value (2024)	Interpretation
Fixed Assets	£9,075	Declined from prior years; possible asset disposals or depreciation
Current Assets	£2,636	Very low liquid assets; insufficient for current obligations
Current Liabilities	£17,697	High short-term debts; pressure to pay creditors soon
Net Current Assets (Working Capital)	-£15,061	Strong symptom of liquidity risk; company cannot cover short-term debts
Total Assets Less Current Liabilities	-£5,986	Negative figure indicates total assets insufficient to cover current debts
Creditors Due After One Year	£9,850	Long-term debt remains substantial
Net Assets (Shareholders’ Funds)	-£16,466	Negative equity; company’s liabilities exceed assets significantly
Share Capital	£100	Minimal equity base to absorb losses
Employees	1 (director)	Very small operation; limited human resources

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3. Diagnosis

• Liquidity Crisis: The company is experiencing a "healthy cash flow" failure; its current liabilities far exceed current assets, leaving it unable to meet short-term obligations without additional financing or asset sales.
• Negative Equity: Persistent losses or accumulated deficits have eroded shareholders’ funds, resulting in negative net assets. This is a critical "symptom of chronic illness" in financial terms, signaling that liabilities outweigh the company’s resources.
• Shrinking Fixed Assets: The decline in fixed assets suggests either asset disposals or lack of reinvestment, possibly to generate cash, which could impair operational capacity.
• Debt Burden: Both short and long-term creditors have a significant claim on company resources, increasing financial strain and risk of insolvency if not managed.
• Small Scale Operation: The business operates at a micro level with minimal staff and capital, limiting its ability to absorb shocks or invest in growth.
• No Audit & Limited Reporting: Micro-entity exemptions mean less transparency; the company must be vigilant about maintaining compliance and monitoring finances closely.

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4. Recommendations

To improve financial wellness, Aharon Limited should consider the following actions:

• Improve Liquidity:

  • Negotiate extended payment terms with creditors to reduce immediate pressure.
  • Accelerate collection of any receivables or consider short-term financing options to bridge cash gaps.
  • Evaluate and possibly liquidate non-essential fixed assets to generate cash.

• Restructure Debt:

  • Engage with lenders to restructure both short- and long-term debt, potentially converting some liabilities into equity or obtaining more favourable terms.

• Increase Capital Base:

  • Consider capital injection from shareholders or new investors to restore positive equity and strengthen the balance sheet.

• Cost Control:

  • Strictly control operating expenses and overheads, given the single-employee structure, to preserve cash.

• Business Review and Strategy:

  • Review business model and pricing to improve profitability.
  • Explore diversification or expansion to increase revenue streams if feasible.

• Financial Monitoring:

  • Implement robust financial controls and regular cash flow forecasting to detect and address distress symptoms early.

• Professional Advice:

  • Seek advice from insolvency practitioners or financial advisors for turnaround strategies if insolvency risk escalates.

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