BROXTON PROPERTIES LIMITED

Executive Summary

Broxton Properties Limited, a recently incorporated construction firm, shows early signs of financial strain with negative working capital and equity. The company faces liquidity challenges due to low cash reserves despite holding significant inventory tied to projects. Immediate focus on cash management, capital strengthening, and operational efficiency is essential to stabilize financial health and support sustainable growth.

BROXTON PROPERTIES LIMITED - Analysis Report

Company Number: 14573954

Analysis Date: 2025-07-29 21:00 UTC

Financial Health Assessment of Broxton Properties Limited

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1. Financial Health Score: D

Explanation: The company exhibits early-stage financial distress symptoms with a negative working capital and negative equity, indicating it is currently under financial strain. The limited trading history (incorporated in 2023) and small scale provide some context, but the current financial position suggests caution.

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2. Key Vital Signs

Metric	Value	Interpretation
Current Assets	£416,159	Represents assets easily convertible to cash within a year.
Cash at Bank	£572	Extremely low cash availability, a critical sign of liquidity risk.
Debtors	£3,087	Amount expected from customers; low relative to liabilities.
Current Liabilities	£424,861	Obligations due within one year; very high relative to assets.
Net Current Assets (Working Capital)	-£8,702	Negative working capital signals inability to cover short-term debts.
Total Assets Less Current Liabilities	-£8,702	Negative figure indicates liabilities exceed assets.
Shareholders’ Funds (Equity)	-£8,704	Negative equity suggests accumulated losses or undercapitalisation.

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3. Symptoms Analysis

• Liquidity Strain ("Poor Pulse of Cash Flow"): The company has only £572 in cash, a dangerously low reserve to meet day-to-day expenses, despite holding inventories worth £412,500. This mismatch indicates a liquidity crunch—cash inflows are not keeping pace with outflows.

• Negative Working Capital ("Symptom of Distress"): With current liabilities exceeding current assets by £8,702, the company may struggle to meet short-term obligations as they fall due, potentially leading to payment delays or reliance on external financing.

• Negative Shareholders’ Funds ("Weak Financial Immunity"): The negative equity position implies that the company’s net worth is below zero, which may reflect initial setup costs, early trading losses, or substantial creditor financing. This weak capital base could impair the company’s ability to absorb financial shocks.

• Industry Context ("Construction Sector Risks"): Operating in construction of domestic buildings (SIC 41202) often requires significant upfront investment in materials and labour, which can strain cash flow, especially for a newly incorporated entity.

• Limited Trading History ("New Patient"): Incorporated in January 2023, the company’s first financial statements reflect early operational challenges and capitalisation status rather than mature performance.

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4. Diagnosis

Broxton Properties Limited is in the nascent stage of its business lifecycle, presenting early signs of financial distress primarily related to liquidity and capital structure. The negative working capital and equity indicate that current liabilities are not fully supported by current assets or shareholder funds, which is a red flag for operational sustainability. The company’s low cash reserves juxtaposed with high inventory levels suggest potential issues in converting stock into cash rapidly—a common challenge in construction projects where work-in-progress ties up funds.

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5. Prognosis

If the current financial structure remains unchanged, the company faces a risk of liquidity shortfalls that could hinder its ability to operate effectively. However, as a young company, there remains potential for improvement through better cash flow management, capital injections, or renegotiation of creditor terms. The prognosis depends heavily on operational execution in the coming months and securing sufficient working capital to support project demands.

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6. Recommendations ("Prescriptions for Financial Wellness")

1. Improve Cash Management: Immediate focus on increasing cash reserves by accelerating debtor collections, managing payment terms with suppliers, or securing short-term credit facilities to avoid liquidity crises.

2. Inventory Turnover Optimization: Evaluate inventory levels and work-in-progress to ensure timely project completion and faster conversion into revenue and cash.

3. Capital Injection: Consider additional funding from shareholders or external investors to strengthen equity and provide a buffer against operational fluctuations.

4. Cost Control: Monitor and control overhead and project costs meticulously to prevent further erosion of equity.

5. Financial Monitoring: Establish regular financial health check-ups, including cash flow forecasting and working capital analysis, to detect symptoms early and intervene promptly.

6. Strategic Planning: Develop a clear business plan with realistic cash flow projections and contingency plans to navigate construction sector volatility.

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