BGR DESIGNS LTD

Executive Summary

BGR DESIGNS LTD is currently facing liquidity and solvency challenges, reflected by negative working capital and shareholders’ funds. Immediate improvements in cash flow management, liability restructuring, and potential capital injection are critical to stabilizing financial health. With targeted interventions, the company can improve its financial resilience and support sustainable growth in its architectural activities.

BGR DESIGNS LTD - Analysis Report

Company Number: 14629302

Analysis Date: 2025-07-29 14:56 UTC

Financial Health Assessment for BGR DESIGNS LTD

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1. Financial Health Score: Grade D

Explanation:
BGR DESIGNS LTD is a newly incorporated private limited company (since January 2023) operating in architectural activities. The company shows significant financial strain with a large negative net current assets (working capital) position and shareholders’ deficit, indicating symptoms of financial distress. These are early warning signs requiring prompt attention to avoid further deterioration.

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2. Key Vital Signs

Metric	Value (£)	Interpretation
Fixed Assets	30,793	Modest investment in long-term assets, typical for a start-up.
Current Assets	81,444	Short-term assets including cash (£19,802) and debtors.
Current Liabilities	299,675	High short-term debts due within one year, a red flag.
Net Current Assets (Working Capital)	-218,231	Negative working capital indicates liquidity stress.
Total Assets Less Current Liabilities	-187,438	Overall asset coverage insufficient to meet short-term liabilities.
Shareholders' Funds (Equity)	-187,439	Negative equity suggests accumulated losses or high liabilities.
Cash at Bank	19,802	Limited cash buffer to cover immediate obligations.
Debtors	61,642	Receivables represent potential inflows but may be delayed.
Trade Creditors	8,855	Part of current liabilities, manageable but included in total.
Bank Loans and Overdrafts	7,855	Small borrowings relative to liabilities.

Interpretation of Vital Signs:

• The "blood pressure" of the company—its liquidity—is low, shown by a large negative net current asset position. This indicates the company may struggle to meet short-term obligations, a symptom of financial distress.
• Negative shareholders’ funds ("equity deficit") reflect the company has used more resources than it has generated, akin to a patient with a poor balance between intake and expenditure.
• While the cash on hand is positive, it is insufficient to cover the large liabilities coming due, indicating a potential "cash flow crisis."
• The company's trade debtors (customers owing money) could improve liquidity if collected promptly, but current liabilities far exceed current assets, suggesting significant short-term financial strain.

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3. Diagnosis

BGR DESIGNS LTD is in the early stages of its business lifecycle but is exhibiting symptoms consistent with financial distress due to liquidity and solvency challenges. The company's current liabilities exceed its assets by a large margin, leading to negative working capital and negative shareholder equity. This situation is comparable to a patient showing signs of organ strain—urgent intervention is needed to restore balance.

Possible causes include:

• High initial financing or operating costs exceeding early revenues.
• Delayed collection of receivables or reliance on credit to finance operations.
• Insufficient equity funding or capital injections relative to liabilities.

The company's financial statements are unaudited, which is common for a small company, but this means the reported positions should be monitored carefully.

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4. Recommendations

To improve financial health, BGR DESIGNS LTD should consider the following tailored actions:

1. Improve Cash Flow Management:

   • Accelerate collection of outstanding debtors by tightening credit terms and following up promptly on overdue accounts.
   • Monitor and control operating expenses to reduce cash outflows.

2. Restructure Short-Term Liabilities:

   • Negotiate with creditors to extend payment terms or convert some short-term liabilities into longer-term debt to ease liquidity pressure.

3. Capital Injection:

   • Consider additional equity funding from the owner or external investors to shore up the balance sheet and reduce negative equity.
   • Alternatively, directors could explore convertible loans or other funding instruments that improve solvency without immediate cash drain.

4. Financial Planning and Forecasting:

   • Produce detailed cash flow forecasts to identify timing of liquidity needs, enabling proactive management of cash shortages.
   • Implement budget controls to avoid unnecessary expenses.

5. Operational Efficiency:

   • Review business model and pricing strategy to improve profitability and generate positive retained earnings over time.
   • Explore new revenue streams or more profitable projects aligned with architectural activities.

6. Professional Advice:

   • Engage with accountants or financial advisors to review financial strategy and explore restructuring options if necessary.
   • Ensure compliance with all filing and tax obligations to avoid penalties adding to liabilities.

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