Company Number: 15169508

Analysis Date: 2025-07-20 18:08 UTC

Financial Health Assessment for AZHAR'S STORAGE LTD
(as at 30 September 2024)

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1. Financial Health Score: D

Explanation:
The company shows significant signs of financial strain. Net current assets are deeply negative (£-7,618), and total net assets are also negative (£-2,642), indicating liabilities exceed assets. These are symptoms of financial distress in the balance sheet, akin to a patient showing signs of organ dysfunction. While the business is still operational (active status), its financial "vital signs" suggest caution.

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2. Key Vital Signs and Interpretation

Metric	Value (£)	Interpretation
Fixed Assets	10,845	Modest investment in long-term assets for a micro entity; reflects some operational capacity.
Current Assets	312	Very low short-term assets; indicates limited liquidity.
Current Liabilities	7,930	Short-term debts are high relative to current assets, leading to liquidity pressure.
Net Current Assets (Working Capital)	-7,618	Negative working capital is a critical symptom of cash flow stress and potential solvency issues.
Total Assets Less Current Liabilities	3,227	Positive but low; shows some cushion after short-term debts but offset by accruals.
Accruals and Deferred Income	5,869	Significant deferred income or accrued expenses, adding to liabilities.
Net Assets (Shareholders’ Funds)	-2,642	Negative net worth indicates the company’s liabilities surpass total assets—a critical warning sign.
Employees	5	A small workforce, typical for micro entities; fixed overheads may strain cash flows.

Summary of Vital Signs:
The company’s financial "pulse" is weak: liquidity is compromised, and the balance sheet shows a deficit position. Negative net assets and working capital are red flags for financial health, similar to a patient exhibiting symptoms of systemic stress.

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3. Diagnosis: Overall Financial Condition

AZHAR'S STORAGE LTD is in an early stage (incorporated less than 1 year), operating as a micro-entity with minimal turnover reflected in the accounts. However, the financial statements reveal symptoms of distress:

• Liquidity Strain: Current liabilities far exceed current assets, indicating difficulty in meeting short-term obligations with available cash or receivables.
• Negative Net Worth: The company’s liabilities exceed its assets, suggesting it is technically insolvent on a balance sheet basis.
• Deferred Income / Accruals: Large accruals/deferred income may reflect unearned customer payments or expenses yet to be realized, potentially skewing immediate liquidity.
• Small Asset Base: Fixed assets are limited, consistent with a start-up or asset-light model, but insufficient to offset liabilities.
• Employee Base: With 5 employees, overhead costs could be significant relative to current asset levels.

In medical analogy, AZHAR'S STORAGE LTD is like a patient showing early signs of organ distress—while still stable, it requires immediate intervention to avoid deterioration.

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4. Recommendations: Steps to Improve Financial Wellness

1. Improve Liquidity Management:

   • Tighten credit control to increase current assets (cash and receivables).
   • Negotiate better payment terms with suppliers to reduce current liabilities pressure.
   • Minimise overhead costs, particularly payroll, until cash flow improves.

2. Review Deferred Income and Accruals:

   • Understand the nature of the £5,869 accruals/deferred income to ensure accurate matching of income and expenses and avoid cash flow surprises.

3. Capital Injection or Funding:

   • Consider equity infusion from the controlling shareholder or external investors to restore positive net assets and working capital.
   • Explore short-term financing options but carefully weigh repayment capacity.

4. Operational Efficiency:

   • Streamline operations to reduce costs and improve profitability.
   • Focus on generating positive cash flows from core activities.

5. Monitor Financial Health Regularly:

   • Establish monthly financial reviews to track liquidity, expenses, and asset quality.
   • Implement early warning indicators to detect worsening symptoms.

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