AMU CONSULTANCY LIMITED

Executive Summary

AMU Consultancy Limited exhibits significant liquidity and capital deficiencies, reflected in negative net current assets and shareholders' funds, signaling financial distress. Immediate measures to improve cash flow, reduce costs, and recapitalize are critical to restore financial health and ensure business continuity. Without intervention, the prognosis remains guarded.

AMU CONSULTANCY LIMITED - Analysis Report

Company Number: 14223156

Analysis Date: 2025-07-20 17:09 UTC

Financial Health Assessment for AMU CONSULTANCY LIMITED

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1. Financial Health Score: D

Explanation:
AMU Consultancy Limited shows clear symptoms of financial distress, primarily due to persistent negative net current assets and shareholders' funds over the past two years. The financial "vital signs" indicate an illiquid position with liabilities far exceeding current assets, reflecting a weakened financial condition. While not yet insolvent, the company is in a precarious position that requires urgent attention to avoid further deterioration.

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2. Key Vital Signs

Metric	31 July 2024	31 July 2023	Interpretation
Fixed Assets	£988	£1,977	Very low asset base; mostly intangible or small assets.
Current Assets	£269	£22,002	Drastic decline, indicating very limited liquid assets.
Current Liabilities	£10,659	£31,616	High short-term obligations, though reduced from prior year.
Net Current Assets	-£10,390	-£9,614	Negative working capital—a key symptom of liquidity stress.
Total Assets less CL	-£9,402	-£7,637	Negative net assets, indicating insolvency on balance sheet.
Shareholders' Funds	-£9,402	-£7,637	Equity capital is negative, reflecting accumulated losses.

Additional Notes:

• The company operates as a micro-entity with minimal assets and one employee, which limits scale and flexibility.
• Director's advances have been largely repaid, reducing intra-company liabilities.
• The company is active and compliant with filing deadlines, which is positive for governance.

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3. Diagnosis

Underlying Business Health:

• Liquidity Crisis: The company consistently exhibits a negative net current asset position, meaning it does not have sufficient short-term assets to cover its short-term liabilities. This is akin to a patient with low blood pressure struggling to maintain vital functions—here, the company's cash flow and working capital are insufficient to meet immediate obligations.

• Capital Erosion: Negative shareholders' funds indicate that the business has accumulated losses exceeding the initial investment and any retained earnings. This "capital anemia" suggests the business is operating at a loss or has not generated sufficient profit to build equity.

• Asset Base: The very low fixed and current assets imply limited operational scale and minimal asset backing, reducing borrowing capacity and financial resilience.

• Stability: The reduction in liabilities from 2023 to 2024 is a positive sign, but the significant drop in current assets is worrying. The company seems to be "bleeding" cash or resources without replenishment, a symptom of distress.

• Director Control: One director owns 75-100% of shares and voting rights, indicating centralized control and decision-making responsibility. This can be a strength in swift decision-making but also concentrates risk.

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4. Recommendations

To improve financial wellness and stabilize the company, consider the following actions:

1. Improve Liquidity:

   • Increase cash reserves through additional capital injection or short-term financing.
   • Accelerate accounts receivable collections and negotiate extended payment terms with suppliers to improve working capital.

2. Cost Management:

   • Reduce operating expenses to conserve cash—review all discretionary spending.
   • Consider downsizing or restructuring operations if feasible.

3. Profitability Focus:

   • Re-evaluate service offerings to increase margins or diversify revenue streams.
   • Implement strict budgeting and financial monitoring practices to detect early warning signs.

4. Capital Restructuring:

   • Explore recapitalization options, including director loans or shareholder equity contributions to restore positive net assets.
   • Consider professional advice on restructuring liabilities to avoid insolvency risk.

5. Governance and Reporting:

   • Maintain timely filing and accurate financial records to ensure transparency and compliance.
   • Regular financial health checks and scenario planning can act as preventive medicine against future distress.

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