AM TUTORIAL LTD

Executive Summary

AM Tutorial Ltd is currently facing financial distress, with a shift from positive net assets to negative equity and reduced liquidity signals. Immediate actions focusing on cash flow management, equity strengthening, and operational efficiency are critical to prevent further deterioration and improve financial stability.

AM TUTORIAL LTD - Analysis Report

Company Number: 14019806

Analysis Date: 2025-07-29 15:31 UTC

Financial Health Score: D

Explanation: AM Tutorial Ltd exhibits clear symptoms of financial distress, with net liabilities and negative equity as of the latest financial year. The financial position has declined sharply from the prior year, indicating underlying issues that require immediate attention. A ‘D’ grade reflects a vulnerable financial state that, if unaddressed, could lead to insolvency risks.

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Key Vital Signs

Metric	2024 (£)	2023 (£)	Interpretation
Current Assets	1,926	2,315	Reduced cash and short-term assets, indicating less liquidity to cover short-term obligations.
Current Liabilities	942	648	Increased short-term debts, rising pressure on working capital.
Net Current Assets (Working Capital)	984	1,667	Healthy working capital but significant decline year-over-year, signaling tightening liquidity.
Accruals & Deferred Income	1,075	575	Large increase in deferred income liabilities, suggests future revenue recognized but cash not yet received.
Net (Liabilities)/Assets	-91	1,092	Shift from positive net assets to net liabilities; a critical warning sign of balance sheet weakness.
Shareholders’ Funds	-91	1,092	Negative equity means the business owes more than it owns; potential insolvency symptom.

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Symptoms Analysis

• Diminishing liquidity: The drop in current assets coupled with rising current liabilities reduces the buffer for meeting short-term commitments.
• Negative net assets: The company moved from a healthy equity position to negative shareholders’ funds within one year, a key symptom of financial distress.
• Rising deferred income: The accruals and deferred income near doubled, indicating reliance on income not yet realized in cash, potentially impairing cash flow.
• No employees reported: A reduction from 1 employee to zero may suggest downsizing or operational constraints impacting revenue generation.
• Micro-entity reporting: Simplified accounting could mask detailed financial issues, but the available data already shows worrying trends.

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Diagnosis

AM Tutorial Ltd’s financial health resembles a patient recently experiencing acute distress: its balance sheet has deteriorated significantly over the last year, with a shift from positive net assets to a negative equity position. This is akin to a heart patient whose vital signs have worsened rapidly. The company’s current assets are insufficient to comfortably cover both current liabilities and deferred income obligations, indicating strained liquidity. The absence of employees may reflect operational contraction, limiting business growth potential.

While working capital remains positive, the overall financial structure is not robust, with net liabilities indicating that liabilities exceed assets. This condition may stem from operating losses, delayed cash collections, or undercapitalization. Without intervention, the company risks insolvency or inability to meet creditor demands.

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Prognosis

If the current trends continue unmitigated, the company’s financial condition may worsen, potentially leading to formal insolvency proceedings. However, the presence of positive working capital and some current assets means there is still time for corrective measures. Strengthening cash flow, reducing deferred income reliance, and recapitalizing equity could stabilize the condition.

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Recommendations

1. Immediate Cash Flow Review: Conduct a detailed cash flow analysis to identify shortfalls and accelerate cash collections.
2. Reduce Deferred Income Dependence: Reassess revenue recognition policies and strive to convert deferred income to cash promptly.
3. Equity Injection: Consider capital infusion from shareholders or external investors to restore positive net assets.
4. Cost Control and Operational Restructuring: Evaluate cost structure to reduce expenses and improve profitability; consider re-hiring or optimizing human resources to support growth.
5. Financial Monitoring: Implement regular financial health check-ups, including liquidity ratios and working capital analysis.
6. Engage Professional Advice: Seek guidance from financial advisors to explore restructuring or turnaround strategies before financial distress escalates.

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