A.P.M BUILDING LTD

Executive Summary

A.P.M BUILDING LTD is currently facing liquidity challenges with significantly reduced working capital and a fragile equity base, indicating potential financial stress. Immediate focus on cash flow management and strengthening capital resources is essential to avoid worsening distress. With careful operational and financial controls, the company can stabilize and improve its financial health.

A.P.M BUILDING LTD - Analysis Report

Company Number: 12640593

Analysis Date: 2025-07-20 16:19 UTC

Financial Health Assessment Report for A.P.M BUILDING LTD

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1. Financial Health Score: D

Explanation:
A.P.M BUILDING LTD exhibits signs of financial strain, particularly in its liquidity position. The company’s net current assets have deteriorated significantly in the latest year, dropping from £2,192 in 2023 to just £352 in 2024. This sharp decline signals a weakening working capital position, suggesting the company may struggle to cover short-term obligations comfortably. While the company remains solvent, these "symptoms of distress" in liquidity warrant attention to improve financial resilience.

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2. Key Vital Signs

Metric	2024 Value	Interpretation
Current Assets	£4,185	Low cash and receivables; a sharp drop from prior year indicates reduced liquidity.
Current Liabilities	£3,833	Significant current obligations; stable but high relative to assets.
Net Current Assets	£352	Positive but minimal working capital, indicating tight short-term financial health.
Net Assets (Shareholders' Funds)	£352	Very low equity base, diminished from previous years, suggesting erosion of retained earnings or accumulated losses.
Average Number of Employees	1	Minimal staff, consistent with micro-entity status, indicating a small operational scale.
Share Capital	£1.00	Nominal capital, common in micro-entities.

Trend Analysis:

• The net current assets dropped drastically from £2,192 in 2023 to £352 in 2024—a reduction of over 80%.
• Net assets (shareholders’ funds) followed a similar declining trend, indicating weakening equity.
• Current liabilities remain high relative to current assets, which may pressure cash flow.
• The company has maintained a micro-entity filing status, simplifying reporting but also reflecting its small size and limited financial buffer.

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3. Diagnosis

Underlying Financial Health:
The company shows "symptoms of distress" primarily in its liquidity position. The marked decline in current assets and net current assets suggests that cash inflows or receivables collection have been under pressure. The company still maintains positive net assets, meaning total assets exceed liabilities, but the margin is razor-thin. This fragile equity base implies limited capacity to absorb financial shocks.

The business operates in the construction sector (SIC codes 41202 and 41201), which can be capital intensive and subject to payment delays. A single employee and nominal share capital indicate a very small operation, which may limit economies of scale and financial flexibility.

No audit has been required or performed, consistent with micro-entity status, but this means financial oversight might be minimal.

Potential Causes:

• Delayed payments from clients reducing available cash.
• Increased short-term liabilities or expenses not matched by corresponding asset growth.
• Low profitability or possibly losses reducing retained earnings and net assets.
• Limited capital injection or funding from shareholders.

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4. Recommendations

To improve financial wellness and stabilize the company’s financial health:

1. Enhance Cash Flow Management:

   • Tighten credit control to accelerate receivables collection.
   • Negotiate better payment terms with suppliers to extend payables without penalties.
   • Maintain a rolling cash flow forecast to anticipate liquidity shortages.

2. Strengthen Capital Base:

   • Consider new capital injection from shareholders to improve net assets and provide a buffer.
   • Explore small business loans or overdrafts cautiously to support working capital needs.

3. Cost Control and Profitability:

   • Review operating expenses to identify cost-saving opportunities.
   • Focus on higher-margin contracts or services to improve profitability.

4. Operational Review:

   • Given the minimal staff, ensure the business model is sustainable with current resources.
   • Diversify client base to reduce reliance on any single source of income.

5. Financial Reporting and Monitoring:

   • Although audit is not mandatory, consider periodic external financial reviews to identify risks early.
   • Use simplified but regular internal financial reporting to monitor vital signs monthly.

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