ASIL DEVELOPMENTS LIMITED

Executive Summary

ASIL DEVELOPMENTS LIMITED is a young company with a stable property asset base but faces liquidity challenges and high leverage. While equity is growing, significant short-term liabilities and negative working capital signal the need for improved cash flow management and gradual debt reduction to ensure long-term financial health. Maintaining compliance and operational focus will be critical to strengthening the company’s financial condition.

ASIL DEVELOPMENTS LIMITED - Analysis Report

Company Number: 13923661

Analysis Date: 2025-07-29 17:42 UTC

Financial Health Assessment of ASIL DEVELOPMENTS LIMITED

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1. Financial Health Score: C

ASIL DEVELOPMENTS LIMITED demonstrates a stable yet cautious financial position typical of a young property management company with significant mortgage liabilities and modest equity growth. While the company shows some positive movement in retained earnings and net assets, the persistent net current liabilities and high gearing ratio suggest symptoms of financial strain that require ongoing management attention.

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2. Key Vital Signs

Metric	2024 Value	Interpretation
Cash at Bank	£13,881	Slightly increased liquidity, but still limited cash buffer.
Current Liabilities	£122,563 (within 1 year)	Relatively high short-term obligations, including director loans, indicating pressure on working capital.
Net Current Assets	-£108,682	Negative working capital, a symptom of liquidity stress. The company owes more short-term than it owns.
Total Assets Less Current Liabilities	£256,318	Shows value after short-term debts are deducted; stable compared to prior year.
Net Assets (Equity)	£8,206 (up from £2,436)	Small but positive equity, showing gradual accumulation of retained earnings.
Shareholders Funds	£8,206	Reflects owners’ stake; low but improving.
Long-term Debt (Bank Loans)	£247,480	Significant leverage secured against investment property, indicating high financial risk but common in asset-heavy industries.
Investment Property Value	£365,000	Stable asset base providing collateral for loans.
Gearing Ratio (Debt / Equity)	~30:1 (very high)	Very high leverage, symptom of financial risk and dependency on debt financing.

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3. Diagnosis: What the Financial Data Reveals

ASIL DEVELOPMENTS LIMITED is in the early stages of its lifecycle (incorporated 2022) and operates in a capital-intensive real estate management sector. The company owns investment property valued at £365,000, funded predominantly through a bank loan of £247,480 secured against the property.

Symptoms of Distress:

• The company exhibits a negative net current assets position (-£108k), indicating a working capital deficit. This is a clear symptom of tight liquidity, meaning the company may struggle to cover short-term obligations without additional cash inflows or refinancing.
• Cash reserves are low (£13,881), although improved from previous year, suggesting limited immediate liquidity.
• Very high gearing (debt to equity) at about 30:1 means the company is heavily reliant on debt financing. While common in property businesses, this level of leverage increases financial risk, particularly if income streams falter.
• Directors’ current accounts (£118,834) form a large part of short-term liabilities, indicating reliance on director loans or deferred payments, which may be a temporary symptom but should be monitored.

Healthy Signs:

• Net assets and shareholders’ funds have increased from £2,436 to £8,206, signaling the company is accumulating retained earnings and building equity.
• The investment property valuation remains stable, supporting the company's asset base.
• The company is current with statutory filings and accounts, indicating good compliance and governance.

Overall, ASIL DEVELOPMENTS LIMITED’s financial health resembles a patient with chronic but manageable conditions—high debt and liquidity stress but stable asset backing and improving equity.

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4. Recommendations

To improve financial wellness and reduce symptoms of distress, the company should consider the following:

1. Enhance Liquidity Management:

   • Increase cash reserves to build a stronger buffer against short-term liabilities.
   • Explore improved cash flow from operations or alternative short-term financing to reduce negative working capital.

2. Address Working Capital Deficit:

   • Negotiate better payment terms with creditors or convert some current liabilities into longer-term obligations.
   • Regularly monitor directors’ current accounts and formalize repayment plans to avoid excessive short-term debt.

3. Leverage Optimization:

   • Develop a plan to gradually reduce reliance on high bank debt to lower gearing risk.
   • Consider capital injections if possible or retain more earnings to build equity.

4. Operational Efficiency:

   • Explore ways to increase rental income or fees from real estate management to improve profitability.
   • Control operating expenses to enhance margins and cash flow.

5. Regular Financial Health Monitoring:

   • Conduct quarterly reviews of key financial metrics to catch early signs of distress.
   • Maintain transparent communication with lenders and shareholders about financial position.

In medical terms, the company is stable but “on medication” (debt) and needs lifestyle changes (better liquidity, working capital management) to prevent future complications such as insolvency or cash flow crises.

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