AXAR TILES LIMITED

Executive Summary

AXAR TILES LIMITED is a newly formed company currently experiencing negative net assets and a working capital deficit, indicating early financial strain. The company must focus on improving liquidity, optimizing inventory, and potentially raising capital to stabilize and strengthen its financial health. With proactive management and financial discipline, it can improve its outlook and avoid the risk of distress.

AXAR TILES LIMITED - Analysis Report

Company Number: 15126929

Analysis Date: 2025-07-20 12:33 UTC

Financial Health Assessment Report for AXAR TILES LIMITED

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1. Financial Health Score: D (At Risk)

Explanation:
AXAR TILES LIMITED shows early signs of financial strain with net liabilities and a negative shareholder equity position. The company is newly incorporated (Sep 2023) and its financial statements for the initial period ending March 2024 reveal a working capital deficit and a shareholders' deficit. This indicates it is currently undercapitalized and its liquidity position is fragile. Without improvements, the company is at risk of financial distress.

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2. Key Vital Signs

Metric	Value (£)	Interpretation
Current Assets	294,453	Reasonable short-term resources held.
Cash	7,537	Very low cash reserves; potential liquidity strain.
Debtors	62,074	Moderate receivables; depends on collection efficiency.
Stocks	224,842	High inventory levels; risk of slow turnover or obsolescence.
Current Liabilities	319,297	Creditors and short-term debts slightly exceed current assets.
Net Current Assets (W.C.)	(24,844)	Negative working capital; indicates liquidity risk.
Net Assets / Shareholders’ Funds	(24,844)	Negative equity; company owes more than it owns.
Called-up Share Capital	150	Minimal paid-up capital; undercapitalized.

Interpretation:

• Negative working capital ("symptom of distress") implies the company may struggle to meet short-term obligations without additional funding or improved cash flow.
• High inventory relative to cash and debtors could indicate potential overstocking, tying up cash in stock that may not convert quickly to cash.
• Negative shareholders’ funds shows that accumulated losses exceed capital invested, a warning sign for solvency.
• Low cash balance ("weak pulse of liquidity") means the company has limited immediate funds to cover expenses or emergencies.

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3. Diagnosis

AXAR TILES LIMITED is a very young enterprise in the wholesale trade sector. The financials reveal "symptoms" commonly seen in start-ups or businesses in early growth phases:

• The company is operating with negative net assets, reflecting initial losses or undercapitalization.
• A working capital deficit indicates that current liabilities exceed current assets, which can lead to cash flow difficulties if not managed properly.
• Inventory forms the largest part of current assets, which may be a bottleneck in liquidity if stock turnover is slow or if stock is not readily saleable.
• Dependence on amounts owed to group undertakings (318k) as a significant part of current liabilities suggests reliance on intra-group financing. This could be a lifeline but also a risk if group support decreases.

Overall, the company is showing early warning signs of financial stress but is not yet in distress. The "patient" needs careful monitoring and active intervention to prevent deterioration.

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4. Recommendations for Financial Wellness Improvement

1. Improve Liquidity Management:

   • Accelerate debtor collections to increase cash inflows.
   • Review credit terms with customers and suppliers to optimize cash conversion cycle.
   • Consider negotiating longer payment terms with creditors to ease immediate cash outflows.

2. Inventory Optimization:

   • Conduct a thorough inventory review to identify slow-moving or obsolete stock.
   • Implement tighter inventory controls and just-in-time purchasing to reduce stock levels and free up cash.

3. Capital Injection:

   • Explore additional equity funding or shareholder loans to strengthen the balance sheet and reduce the negative net assets position.
   • Alternatively, consider external financing options to support working capital needs.

4. Cost Control and Profitability Focus:

   • Monitor operating expenses closely to avoid unnecessary cash burn.
   • Develop strategies to increase sales and improve gross margins to move towards profitability.

5. Regular Financial Monitoring:

   • Establish monthly cash flow forecasts and variance analysis to detect early signs of distress.
   • Engage with financial advisors to plan for sustainable growth.

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Executive Summary