B H (FARNHAM) LIMITED

Executive Summary

B H (FARNHAM) LIMITED currently faces significant financial challenges, marked by negative net assets and a severe working capital deficit. While its fixed assets provide some foundation, the company’s liquidity position is weak, threatening its short-term solvency. Immediate action is recommended to improve cash flow, manage debts, and strengthen equity to restore financial health.

B H (FARNHAM) LIMITED - Analysis Report

Company Number: 13058585

Analysis Date: 2025-07-20 11:44 UTC

Financial Health Assessment for B H (FARNHAM) LIMITED

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1. Financial Health Score: D

Explanation:
This company shows signs of financial distress, reflected by negative net assets and a substantial imbalance between current liabilities and current assets. While it remains operational and compliant with filings, the company’s financial "vitals" suggest caution and the need for remedial action to restore a healthier financial state.

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2. Key Vital Signs

Metric	2023 Value (£)	Interpretation
Fixed Assets	118,275	Reflects investment in long-term real estate assets; stable over years.
Current Assets	2,126	Very low liquid assets; limited cash or receivables.
Current Liabilities	147,506	High short-term debts due; significantly exceeds current assets.
Net Current Assets	-145,380	Negative working capital indicating liquidity strain ("symptom of distress").
Total Assets less Current Liabilities	-27,105	Negative equity position; liabilities exceed assets.
Net Assets (Shareholders’ Funds)	-27,105	Negative net worth, indicating financial weakness.

Interpretation:

• The company’s negative net assets are a critical red flag. This means liabilities overhang assets, akin to a patient with dangerously low blood pressure — an unstable condition.
• The working capital deficit (current assets far less than current liabilities) signals that the company may struggle to meet short-term obligations, a key symptom of liquidity stress.
• Fixed assets are stable, suggesting the company holds real estate assets that could be leveraged or sold to improve cash flow.
• The company’s share capital is minimal (£100), showing limited initial equity cushion.

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3. Diagnosis

The financial data reveal a company grappling with liquidity and solvency challenges despite stable fixed assets. The negative net asset position indicates that accumulated losses or liabilities have eroded shareholder equity, putting the company in a financially precarious position. The large short-term creditor obligations compared to very small current assets suggest the risk of cash flow shortages.

This condition can be likened to a patient with chronic symptoms of distress—while the company has valuable "organs" (fixed assets), the inability to cover immediate debts threatens its operational viability. The company is not currently in liquidation or administration but should be monitored closely to avoid deteriorating into such states.

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4. Recommendations

• Improve Liquidity:

  • Seek ways to convert fixed assets into cash or reduce short-term liabilities, such as negotiating extended payment terms with creditors or arranging bridging finance.
  • Explore asset sales or refinancing options to inject cash and reduce the working capital deficit.

• Strengthen Equity Base:

  • Consider capital injections from shareholders or new investors to improve net assets and provide a financial buffer.
  • Retain earnings where possible rather than distributing profits.

• Cost and Debt Management:

  • Review operational expenses to identify cost-saving opportunities.
  • Prioritize repayment or restructuring of current liabilities to reduce the pressure on working capital.

• Regular Financial Monitoring:

  • Implement tighter cash flow forecasting and financial controls to detect early warning signs.
  • Engage with financial advisors or turnaround specialists if deterioration continues.

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