APCA CONTRACTS LIMITED

Executive Summary

APCA Contracts Limited is currently experiencing financial stress, marked by negative working capital and net liabilities, indicating liquidity challenges and capital erosion. Director advances provide temporary support, but the company must improve liquidity, inject capital, and control costs to restore financial health and ensure sustainable operations.

APCA CONTRACTS LIMITED - Analysis Report

Company Number: NI678428

Analysis Date: 2025-07-29 19:50 UTC

Financial Health Assessment for APCA CONTRACTS LIMITED

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1. Financial Health Score: D

Explanation:
APCA Contracts Ltd exhibits signs of financial strain primarily due to net liabilities and negative working capital. While the company remains active and compliant with filing deadlines, the financial indicators suggest a precarious position that requires close attention. The “D” grade reflects a below-average financial health status, indicating symptoms of distress but not yet insolvency.

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2. Key Vital Signs

Metric	2024 Value (£)	Interpretation
Current Assets	3,323	Low level of liquid assets; limited buffer for short-term obligations.
Current Liabilities	3,823	Slightly higher than current assets, indicating liquidity pressure.
Net Current Assets (Working Capital)	-500	Negative working capital signals potential difficulty meeting short-term debts.
Net Assets	-1,100	Net liabilities indicate the company owes more than it owns, a critical warning sign.
Share Capital	100	Minimal equity base; limited financial cushion.
Directors’ Loan Account	2,933 (owed by directors)	Positive: directors have advanced funds, supporting liquidity.
Employee Numbers	Nil	No employees; possibly limited operational scale or outsourcing labor.

Interpretation of Vital Signs:

• Negative Working Capital ("symptom of liquidity strain"): The company’s current liabilities exceed current assets by £500, suggesting insufficient liquid resources to cover immediate debts. This is akin to a patient having low blood pressure—dangerous if prolonged without intervention.
• Net Liabilities ("symptom of capital erosion"): The firm’s total liabilities exceed its assets by £1,100, meaning it is technically insolvent on a balance sheet basis. This is similar to a negative net worth in health terms — an indication of weakened financial "immune system."
• Directors’ Loans ("internal financial support"): The directors have injected £2,933, which acts like a life-support system keeping the company afloat temporarily. However, reliance on director advances is not sustainable long-term.

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3. Diagnosis: Overall Financial Condition

APCA Contracts Limited is showing clear signs of financial distress despite remaining operational. The negative working capital and net liabilities suggest the company is under liquidity pressure and has eroded its financial base. The absence of employees may indicate a lean operational structure, possibly due to low business activity or reliance on subcontractors.

The directors’ loan advances provide some breathing room but also highlight dependence on internal funding sources. This is similar to a patient relying on medication without addressing underlying health issues.

Given the company’s micro-entity status and recent incorporation (2021), it may still be in a growth or setup phase, but the current financial "symptoms" require prompt action to avoid further deterioration.

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4. Recommendations: Specific Actions for Financial Wellness

• Improve Liquidity Management:
  Prioritize increasing current assets, particularly cash reserves, to ensure the ability to meet short-term liabilities. This could involve accelerating debtor collections, negotiating extended payment terms with creditors, or injecting additional capital.

• Address Capital Deficit:
  Consider capital injection either through additional share capital or director loans to restore positive net assets. This is vital to rebuild the financial "immune system" and improve stakeholder confidence.

• Review Operational Model:
  Evaluate whether the absence of employees is sustainable or if hiring or subcontracting adjustments are needed to increase revenue generation.

• Cost Control and Cash Flow Monitoring:
  Implement strict expense controls and real-time cash flow tracking to detect and mitigate liquidity risks early.

• Explore Financing Options:
  Investigate external financing such as small business loans or grants targeted at construction sector SMEs to provide working capital support.

• Regular Financial Reviews:
  Establish monthly financial health checks to monitor key metrics (working capital, cash flow, net assets) and adjust strategy accordingly.

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