Company Number: 14500915

Analysis Date: 2025-07-29 12:43 UTC

Financial Health Assessment for BROWN AND VAUGHAN LIMITED

---

1. Financial Health Score: D

Explanation:
The company exhibits significant financial strain, evidenced by net current liabilities and negative shareholders' funds. This score reflects a concerning level of financial distress, indicating the company is currently "unwell" financially and requires prompt attention to restore stability.

---

2. Key Vital Signs

Metric	Value (£)	Interpretation
Current Assets	63,550	Cash and short-term assets; relatively low liquidity.
Current Liabilities	115,674	Obligations due within one year; exceeds current assets.
Net Current Assets	-52,124	Negative working capital; "symptom of distress."
Shareholders' Funds	-52,124	Negative equity; indicates accumulated losses or deficit.

• Negative Working Capital (Net Current Assets): The company’s short-term liabilities exceed its short-term assets by £52,124. This is a critical sign of liquidity problems — the company may struggle to meet its immediate financial obligations.

• Negative Shareholders' Funds: The company’s net assets are negative, meaning liabilities exceed total assets. This often reflects either accumulated losses or undercapitalization, which can undermine creditor and investor confidence.

• Micro-Entity Status: The company is classified as a micro entity, with relatively small turnover and asset base. It employs 7 people, which is notable for a micro company but may contribute to fixed cost pressures.

• No Audit Requirement: The company is exempt from audit, limiting the external assurance on its financial health but reducing compliance costs.

---

3. Diagnosis

The financial "symptoms" suggest BROWN AND VAUGHAN LIMITED is in a fragile state:

• Liquidity Concern: Negative net current assets indicate potential cash flow shortages. The company may face challenges paying suppliers, creditors, or meeting payroll promptly, which can inhibit day-to-day operations.

• Capital Deficiency: Negative shareholders’ funds point to an erosion of equity capital. This could limit the company’s ability to raise new funds or secure bank financing, and may signal underlying operational losses or heavy initial investment without commensurate returns yet.

• Early Stage or Growth Phase: Incorporated in late 2022, the company is relatively new. Negative equity in early years can sometimes reflect startup investments and initial losses before profitability is achieved. However, sustained negative equity would be a red flag.

• No Profit & Loss Disclosure: The absence of a profit & loss account limits insight into revenue generation and cost control. The director's report does not clarify the cause of losses or financial strategy.

---

4. Recommendations

To improve the company's financial health, consider the following steps:

1. Improve Liquidity Management:

• Tighten credit control to accelerate cash inflows.
• Negotiate extended payment terms with suppliers to ease short-term cash pressure.
• Regularly forecast cash flow to anticipate liquidity gaps and act proactively.

2. Address Capital Deficiency:

• Consider injecting additional equity capital from the shareholder to restore positive net assets.
• Explore short-term financing options to cover immediate obligations, but cautiously to avoid over-leverage.

3. Enhance Financial Transparency:

• Prepare and monitor detailed profit and loss accounts to understand cost drivers and revenue trends.
• Implement budgeting and financial controls to detect and address losses early.

4. Strategic Review:

• Evaluate business model viability and cost structure given the negative equity and working capital.
• Assess pricing, sales strategy, and operational efficiency to target profitability.

5. Director Oversight:

• Given sole control by Mr. David Brown, consider external advisory support to provide objective financial guidance.

---

Medical Analogy Summary

BROWN AND VAUGHAN LIMITED is currently showing "symptoms of financial distress" — akin to a patient with low blood pressure (liquidity) and depleted reserves (negative equity). Immediate intervention is needed to stabilize cash flow ("restore healthy circulation") and rebuild capital ("replenish vital reserves") to avoid a critical condition that could lead to insolvency.

---