AKONSTRUCT LTD

Executive Summary

Akonstruct Ltd displays improving but still negative working capital, indicating cautious liquidity management is needed to avoid cash flow strain. The company maintains positive equity but faces risks from rising liabilities and debtor balances. Focused actions on cash collection, creditor management, and financial planning will enhance its financial wellness and stability.

AKONSTRUCT LTD - Analysis Report

Company Number: SC684146

Analysis Date: 2025-07-29 20:10 UTC

Financial Health Assessment: AKONSTRUCT LTD as of 31 December 2023

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1. Financial Health Score: C

Explanation:
Akonstruct Ltd shows mixed financial signs. While it is an active company growing its current assets and cash reserves, there are clear symptoms of liquidity stress, reflected in persistent negative net current assets (working capital). Shareholders’ funds have declined slightly but remain positive. Overall, the company is stable but with cautionary signs that require management attention.

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2. Key Vital Signs:

Metric	2023 Value	Interpretation
Current Assets	£27,358	Increased significantly from prior years, indicating improved short-term resource availability.
Cash	£5,883	Improved cash position is a positive sign of liquidity management.
Debtors	£21,475	Growth in debtors signals more sales or extended credit, but also potential cash flow delays.
Current Liabilities	£30,456	Increased liabilities, higher than current assets, indicating potential short-term financial strain.
Net Current Assets (Working Capital)	-£3,098	Negative working capital (impaired liquidity), a symptom of cash flow pressure.
Shareholders’ Funds (Equity)	£11,751	Slight decrease from prior year but remains positive, indicating net asset backing is intact.
Tangible Fixed Assets	£14,849	Reduced fixed assets due to depreciation; moderate asset base for the size of the company.
Average Employees	2	Small team consistent with micro/small company classification.

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3. Diagnosis:

Liquidity and Working Capital:
The company’s working capital is negative for the second consecutive year, though showing slight improvement in 2023. This "symptom" suggests that the company may be relying on short-term financing or stretched payment terms to meet obligations, creating a potential risk of cash flow difficulties if not managed carefully.

Asset Management:
There was a noticeable increase in current assets, particularly debtors and cash, indicating more sales or credit extended to customers. However, the rise in debtors compared to cash suggests some collection lag, which can exacerbate liquidity issues if customers delay payments.

Capital Structure and Solvency:
Shareholders’ funds remain positive but have declined slightly, showing restrained profitability or possible retained losses. The company has minimal share capital (£1.00), typical for small private companies, and depends on retained earnings for equity.

Profitability and Operations:
Income statement details were not provided, but the reduction in equity and tangible assets depreciation suggest the company is not aggressively expanding fixed assets or generating significant retained profits. The small employee base aligns with the company’s micro/small size and operational scale.

Risk Factors:

• Negative working capital is a warning sign ("symptom of distress") for short-term financial health.
• Rising liabilities and debtors require close monitoring to avoid liquidity crunches.
• No audit was conducted, so financial accuracy depends on internal controls and director oversight.

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4. Recommendations:

1. Improve Cash Flow Management:

   • Tighten debtor credit terms and accelerate collection processes to convert receivables into cash faster.
   • Negotiate longer payment terms with creditors where possible to ease working capital pressure.

2. Monitor and Control Current Liabilities:

   • Avoid unnecessary short-term borrowings that increase liabilities.
   • Maintain a clear schedule of creditor payments to prevent overdue liabilities.

3. Enhance Financial Planning:

   • Implement regular cash flow forecasting to anticipate liquidity needs.
   • Consider short-term financing options (e.g., overdrafts or invoice financing) to bridge timing gaps.

4. Asset Utilisation Review:

   • Assess whether tangible assets are being used efficiently; consider selling underutilised equipment to improve liquidity.

5. Strengthen Profitability:

   • Explore opportunities to increase turnover or improve margins to boost retained earnings and equity.

6. Maintain Compliance and Transparency:

   • Continue timely filing of accounts and confirmation statements to avoid penalties and maintain good standing.

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