ALPHA POWDER COATING & EXHAUSTS LTD

Executive Summary

ALPHA POWDER COATING & EXHAUSTS LTD is currently in a financially weakened state, with persistent negative net assets and critically low cash reserves indicating liquidity distress. Immediate focus should be on improving liquidity and managing creditor pressures to avoid insolvency risks. Strategic financial restructuring and operational improvements are essential for stabilizing and revitalizing the business’s financial health.

ALPHA POWDER COATING & EXHAUSTS LTD - Analysis Report

Company Number: SC658083

Analysis Date: 2025-07-29 18:25 UTC

Financial Health Assessment of ALPHA POWDER COATING & EXHAUSTS LTD

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1. Financial Health Score: D

Explanation:
The company’s financial health is currently poor, as indicated by persistent negative net assets and negative working capital over multiple years. The balance sheet shows a "symptom of distress" with liabilities exceeding assets, indicating financial strain. While the company remains active, its financial condition suggests urgent attention is needed to restore stability. The grade D reflects significant financial risks but not yet insolvency or administration.

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2. Key Vital Signs

Vital Sign	2024 Value	Interpretation
Current Assets	£9,346	Low liquidity; very limited cash (£1) available
Cash on Hand	£1	Critically low "cash flow pulse"—risk of cash starvation
Current Liabilities	£44,993	High short-term debts to be serviced soon
Net Current Assets	-£35,647	Negative working capital—indicates liquidity problems
Net Assets (Equity)	-£23,626	Negative net worth—company owes more than owns
Shareholders’ Funds	-£23,726	Equity deficit signals accumulated losses
Fixed Assets (Tangible)	£15,622	Moderate asset base but overshadowed by liabilities
Debtors (Trade + Other)	£2,845	Some money owed to company but low relative to liabilities
Creditors (current + long)	£45,626	Heavy creditor burden, increasing year-on-year
Employee Count	1 (2024)	Very small operation size, limiting resources

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3. Diagnosis

Symptoms Analysis:

• The company displays classic symptoms of financial distress: negative net assets and working capital deficits consistently over the past 4 years.
• Cash on hand has diminished drastically from £1,896 in 2020 to just £1 in 2024, indicating a weak "cash flow heartbeat" and potential for cash flow crises.
• Current liabilities have grown significantly, especially trade creditors and other creditors, putting pressure on short-term solvency.
• The company’s tangible assets have been fairly stable but are insufficient to cover mounting liabilities.
• Shareholders' funds are deeply negative, showing accumulated losses and erosion of owner capital.
• The workforce has reduced, suggesting potential downsizing or operational constraints.
• The director holds full control, possibly centralizing decision-making but also concentrating risk.
• The company is entitled to audit exemption but has voluntarily filed full accounts, showing compliance but no profit & loss disclosed for the latest year limits insight into operational performance.

Overall Diagnosis:
ALPHA POWDER COATING & EXHAUSTS LTD is financially unwell, exhibiting "symptoms of distress" such as cash starvation, persistent negative equity, and high creditor pressure. The company is at risk of liquidity crunches if current liabilities are not managed or restructured. Without intervention, there is a risk of insolvency or forced restructuring. The business model or market conditions may be challenging, and the director needs to act decisively to stabilize finances.

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4. Recommendations

Immediate Actions:

• Improve Liquidity: Increase cash reserves urgently through new equity injection, debt refinancing, or asset sales. The current £1 cash balance is dangerously low.
• Renegotiate Creditors: Seek extended payment terms to reduce short-term cash pressure and avoid default. Prioritize tax and social security liabilities to prevent penalties.
• Review Cost Structure: Evaluate operational expenses and workforce to reduce overheads and improve cash flow "vitality".
• Financial Forecasting: Develop detailed cash flow forecasts to identify timing of cash needs and avoid surprises.

Medium-Term Actions:

• Capital Injection: Consider bringing in new investors or additional capital from existing shareholders to restore positive equity and strengthen the balance sheet "immune system".
• Enhance Revenue Streams: Focus on improving sales and debtor collection to boost current assets and working capital.
• Asset Utilization: Review fixed asset use and consider disposals of underutilized assets to generate cash.
• Seek Expert Advice: Engage financial advisors or turnaround specialists to design a restructuring plan.

Long-Term Actions:

• Strengthen Controls: Implement tighter financial controls and regular monitoring of key metrics to detect early "symptoms" of deterioration.
• Strategic Review: Assess business model viability, market positioning, and growth opportunities to return to profitability and sustainable financial health.

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