AVDAR LTD

Executive Summary

AVDAR LTD demonstrates positive equity growth but faces liquidity challenges due to increasing current liabilities and declining cash reserves. Immediate focus on debtor collection and working capital management is recommended to strengthen financial stability and support sustainable growth.

AVDAR LTD - Analysis Report

Company Number: 12814891

Analysis Date: 2025-07-20 12:04 UTC

Financial Health Assessment Report for AVDAR LTD

---

1. Financial Health Score: C

Explanation:
AVDAR LTD shows signs of ongoing operations with some growth in assets and equity, but it currently experiences negative working capital and a relatively tight liquidity position. While the company is solvent with positive net assets and shareholders' funds, cash flow constraints and creditor levels indicate caution. This grade reflects a company that is stable but exhibiting symptoms of financial strain that require management attention.

---

2. Key Vital Signs

Metric	2023 Value (£)	2022 Value (£)	Interpretation
Current Assets	384,092	258,314	Increased current assets, good sign of operational scale-up.
Cash at Bank	51,469	117,644	Significant drop in cash reserves, indicating tighter liquidity or cash outflows beyond inflows.
Debtors (Accounts Receivable)	332,623	132,170	Large increase in debtors; potential cash collection issues or extended credit terms to customers.
Current Liabilities	500,454	352,164	Increase in short-term obligations, putting pressure on liquidity.
Net Current Assets (Working Capital)	(116,362)	(93,850)	Negative working capital indicates the company may struggle to meet short-term debts from current assets.
Total Assets Less Current Liabilities	39,794	7,721	Positive net assets showing solvency but thin buffer against liabilities.
Shareholders’ Funds (Equity)	39,794	7,721	Equity has grown, indicating retained earnings accumulation or capital injection.

Additional Insights:

• Tangible fixed assets have increased, indicating investment in operational capacity.
• Trade creditors and taxation liabilities have increased significantly, requiring careful management to avoid liquidity crunch.
• The accounts are unaudited but prepared under small companies regime, so some caution in data completeness is warranted.

---

3. Diagnosis: Financial Condition Overview

AVDAR LTD is akin to a patient with a stable but stressed cardiovascular system. The company has managed to grow its asset base and equity (healthy heart muscle), yet it faces symptoms of liquidity distress (reduced cash reserves and rising current liabilities). Negative working capital is a notable warning sign—like a low blood pressure reading that signals insufficient immediate resources to cover urgent obligations.

The surge in trade debtors suggests the company is extending more credit or facing delays in customer payments, straining cash flow. Meanwhile, increased creditors and tax liabilities are akin to increasing medical stressors that strain the system’s ability to maintain steady function.

Though the net assets remain positive, indicating no immediate threat to solvency (the patient is still standing), the balance of short-term assets and liabilities suggests the company must enhance its cash flow management to avoid a potential liquidity crisis.

---

4. Recommendations: Steps to Improve Financial Wellness

• Improve Cash Flow Management:
  Focus on accelerating debtor collections. Consider tightening credit terms or offering early payment discounts. This will replenish the "cash reserves" and alleviate liquidity stress.

• Manage Working Capital More Effectively:
  Negotiate longer payment terms with suppliers and manage stock levels carefully to reduce pressure on current liabilities.

• Monitor and Control Overheads:
  Review operating expenses to ensure they are aligned with revenue growth and cash availability, preventing unnecessary cash burn.

• Regular Financial Reviews:
  Implement monthly cash flow forecasting and financial health monitoring to catch early warning signs of distress and take timely action.

• Explore Financing Options:
  If cash flow pressures persist, consider short-term financing facilities such as invoice discounting or a revolving credit facility to maintain operational liquidity.

---

Executive Summary
AVDAR LTD is a growing company with positive net assets but currently showing signs of liquidity stress, reflected in negative working capital and reduced cash reserves. The financial health is stable but cautious, requiring improved cash flow management and working capital controls to ensure ongoing operational resilience and prevent financial distress.