AVA BUSINESS SUPPORT LTD

Executive Summary

AVA Business Support Ltd is currently exhibiting signs of financial strain, with negative working capital and minimal equity indicating liquidity challenges. While there has been a modest recovery in net assets, the company remains in a fragile financial state requiring urgent action to improve cash flow and capital structure. Focused management of receivables, payables, and potential capital infusion are crucial steps to restore financial health.

AVA BUSINESS SUPPORT LTD - Analysis Report

Company Number: 13737070

Analysis Date: 2025-07-19 11:55 UTC

Financial Health Assessment for AVA BUSINESS SUPPORT LTD

---

1. Financial Health Score: D

Explanation:
AVA Business Support Ltd currently shows financial distress symptoms typical of a company struggling with liquidity and working capital management. Despite a modest improvement in net assets, the negative net current assets (working capital deficit) and minimal shareholder funds result in a below-average financial health grade. The company’s financial "vital signs" indicate a fragile balance sheet that needs careful management to avoid future insolvency risks.

---

2. Key Vital Signs

Metric	Latest (2023)	Previous (2022)	Interpretation
Fixed Assets	£7,500	£11,250	Long-term assets slightly decreased; minimal fixed asset base typical for a micro business.
Current Assets	£0	£67	Critically low current assets indicate no readily available cash or receivables to meet short-term obligations.
Current Liabilities	£6,405	£11,987	Short-term debts have decreased but remain significant relative to assets and equity.
Net Current Assets (Working Capital)	-£6,405	-£11,920	Negative working capital ("symptom of distress"), indicating liquidity problems and potential cash flow constraints.
Total Assets Less Current Liabilities	£1,095	-£670	Improvement from negative to positive net assets, showing slight recovery but still very weak equity.
Shareholders’ Funds (Equity)	£1,095	-£670	Marginal positive equity after prior losses; however, the capital base is minimal (£1 share capital).
Average Employees	1	1	Small scale operation, typical of micro-entity status.

---

3. Diagnosis

The "patient," AVA Business Support Ltd, is currently in a financially fragile state. The company’s balance sheet shows the classic "symptoms" of cash flow distress: negative working capital and very low liquid assets. This suggests that the business may struggle to meet immediate obligations without additional cash injections or improved receivables management.

The slight improvement in net assets from a negative £670 to a positive £1,095 is encouraging but remains marginal given the size of liabilities. The very low share capital (£1) and minimal fixed assets imply limited financial buffer or collateral to leverage for funding.

The company operates as a micro-entity with only one employee, reflecting a lean business model but also limited operational scale to absorb financial shocks. The director’s control over shares and voting rights is consolidated, which facilitates decision-making but also places the responsibility for financial recovery squarely on management.

---

4. Recommendations

Immediate Actions:

• Improve Liquidity:
  Focus on increasing current assets, particularly cash or receivables. Consider accelerating client payments or negotiating longer payment terms with creditors to relieve immediate cash flow pressure.

• Working Capital Management:
  Implement tighter control over payables and inventory. Even though inventory is not reported, monitor all short-term obligations closely to avoid liquidity crises.

• Capital Injection:
  Explore options for fresh equity or short-term loans to strengthen the balance sheet and provide a cash buffer.

• Cost Control:
  Maintain a strict control on expenses given the micro-scale operation and limited resources.

Medium-Term Strategies:

• Revenue Growth:
  Develop a clear plan to increase sales or diversify services to build up assets and create a sustainable profit stream.

• Financial Monitoring:
  Regularly track financial ratios such as current ratio, quick ratio, and equity to catch early signs of distress and manage proactively.

• Stakeholder Communication:
  Maintain transparent communication with shareholders and creditors to build trust and potentially negotiate better terms.

---