Company Number: 12825686

Analysis Date: 2025-07-19 12:13 UTC

Financial Health Assessment for AILIP LIMITED (as of 31 December 2024)

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1. Financial Health Score: D

Explanation:
AILIP LIMITED shows significant financial distress as indicated by negative net assets and net current liabilities at year-end 2024. Despite being a micro-entity with limited operations, the company’s balance sheet reveals symptoms typical of a business under strain—negative working capital and an overall negative net worth. The financials suggest urgent intervention is needed for recovery.

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2. Key Vital Signs

Metric	2024 Value (£)	2023 Value (£)	Interpretation
Fixed Assets	2,160	3,604	Small long-term asset base, declining over the year.
Current Assets	858	44,382	Sharp decrease indicates reduced liquidity.
Prepayments & Accrued Income	8,530	16,395	Reduced advance payments, possibly less operational activity.
Creditors (due within 1 year)	(15,934)	(49,936)	Reduced short-term liabilities but still significant debt.
Net Current (Liabilities)/Assets	(6,546)	10,841	Shift from positive to negative working capital, a critical warning sign.
Accruals & Deferred Income	(10,382)	(1,800)	Increased deferred income and accruals, may mask revenue recognition.
Net (Liabilities)/Assets	(14,768)	12,645	Significant deterioration from positive net assets to negative net worth.
Share Capital	1.00	1.00	Minimal share capital, typical for micro-entities.
Number of Employees	1	1	Sole director/employee; limited operational scale.

Interpretation of Vital Signs:

• The company is experiencing a "symptom of distress" marked by a negative net asset position (£-14,768), indicating that liabilities exceed assets. This is a critical sign akin to "organ failure" in financial health terms.
• The sharp fall in current assets (from £44,382 to £858) coupled with persistent current liabilities results in negative working capital, reflecting a "cash flow malaise". This can limit the company’s ability to meet short-term obligations.
• Increased accruals and deferred income suggest cautious revenue recognition, possibly reflecting uncertainty or delayed income.
• The repayment of a director loan in 2024 improves liquidity but the overall financial position remains fragile.

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3. Diagnosis

AILIP LIMITED is currently in a financially unhealthy state. The negative net assets imply that the company’s liabilities surpass its total assets, which is indicative of insolvency risk if the situation persists. The deterioration from a modestly positive net asset position in 2023 to a significant net liability in 2024 signals worsening financial conditions. Negative working capital points to potential liquidity issues—difficulty in covering short-term debts with available current assets.

The company's limited scale (one employee/director) and micro-entity status mean it may be vulnerable to cash flow shocks and operational setbacks. The management consultancy sector (SIC 70229) typically relies on human capital and recurring contracts, so client retention and timely payments are critical.

Overall, the financial "vital signs" indicate a stressed business with impaired financial resilience that requires strategic intervention to avoid further deterioration or potential insolvency.

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4. Recommendations

To steer AILIP LIMITED back to a healthier financial state, consider the following prescriptions:

1. Improve Liquidity Management:

   • Actively manage receivables and payables to avoid cash shortfalls.
   • Negotiate extended credit terms with suppliers or arrange short-term financing to ease working capital pressure.

2. Capital Injection:

   • Consider raising additional equity capital or director loans to strengthen the balance sheet and restore positive net assets.
   • A modest capital injection can act like a "boost to the immune system," helping the company to withstand financial shocks.

3. Cost Control and Operational Efficiency:

   • Review and reduce overhead costs to preserve cash flow.
   • Streamline operations to increase profitability, especially important given the consultancy business model.

4. Revenue Enhancement:

   • Focus on client acquisition and retention strategies to increase income streams.
   • Explore new service offerings or markets to diversify revenue.

5. Regular Financial Monitoring:

   • Implement monthly cash flow forecasts and financial reviews to catch symptoms of distress early.
   • Use financial dashboards to keep leadership informed and responsive.

6. Seek Professional Advice:

   • Engage with a financial advisor or insolvency practitioner if financial health does not improve, to explore restructuring options.

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