DAK PROPERTIES (SCOTLAND) LTD

Executive Summary

DAK PROPERTIES (SCOTLAND) LTD shows typical financial strain of a newly formed company with significant fixed asset investment but insufficient liquid assets to cover short-term liabilities. The company is currently reliant on director funding to manage its cash flow. Addressing liquidity challenges through improved cash management, strengthening equity, and formalizing director loans will be critical to achieving a healthier financial state and sustainable growth.

DAK PROPERTIES (SCOTLAND) LTD - Analysis Report

Company Number: SC759887

Analysis Date: 2025-07-29 15:23 UTC

Financial Health Assessment Report for DAK PROPERTIES (SCOTLAND) LTD
Period Ending: 29 February 2024

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1. Financial Health Score: D

Explanation:
DAK PROPERTIES (SCOTLAND) LTD is a newly incorporated private limited company operating in real estate management. The financial health score of D reflects early-stage challenges characterized by negative working capital and significant short-term liabilities compared to cash resources. While the company holds tangible fixed assets, the current liabilities far exceed liquid assets, indicating liquidity stress symptoms. Given its startup nature and limited operational history, this score suggests caution but also potential for improvement with strategic financial management.

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2. Key Vital Signs (Critical Metrics and Interpretation)

Metric	Value (£)	Interpretation
Cash at Bank	5,786	Very low cash reserves, indicating limited liquidity "blood flow" for day-to-day operations.
Current Liabilities	163,450	High short-term debts ("pressure on the heart") that must be settled within one year.
Net Current Assets (Working Capital)	-157,664	Negative working capital ("symptom of distress") suggests the company may struggle to meet short-term obligations without additional funds.
Fixed Assets (Tangible Property)	162,538	Significant long-term asset base, a positive "organ strength" indicator, but not liquid.
Total Assets Less Current Liabilities	4,874	Narrow margin of assets over current liabilities; weak buffer against financial shocks.
Shareholders' Funds (Equity)	4,874	Low capital base; reflects initial investment and retained earnings (if any).

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3. Diagnosis: What the Financial Data Reveals About Business Health

• Liquidity Issues: The company’s "circulatory system"—cash and liquid resources—is insufficient relative to its immediate debts. Negative working capital (-£157,664) is a clear symptom of liquidity strain, meaning the company lacks enough short-term assets to cover its short-term liabilities. This is a critical warning sign in the early stages of business life.

• Asset Structure: The company owns tangible fixed assets worth £162,538, likely property, which is its core business asset. However, these assets are illiquid and cannot quickly be converted into cash to relieve short-term financial pressures.

• Capitalization: Shareholders’ funds are minimal at £4,874, indicating limited equity cushion to absorb losses or finance growth. The company’s financial "immune system" is weak, making it vulnerable to unexpected financial shocks.

• Debt Composition: The majority of current liabilities arise from directors’ current accounts (£161,323), which suggests that the directors have provided short-term loans or credit to the company. While this can be a temporary lifesaver, it also implies dependency on director funding to keep the business solvent.

• Operational Stage: As a company incorporated in early 2023, the financial statements cover just over a year. There is no income statement provided, which is typical for small companies, so profitability and cash flow from operations cannot be assessed directly. The current financial profile is typical of an early-stage company investing in fixed assets but facing short-term financing challenges.

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4. Recommendations: Specific Actions to Improve Financial Wellness

• Improve Cash Flow Management:
  The company needs to focus on increasing its liquid assets to address the "symptoms of distress" caused by negative working capital. Strategies could include accelerating receivables, negotiating extended payment terms with creditors, or generating operational cash inflows.

• Review Director Loans:
  The high balance on directors’ current accounts (£161,323) should be managed carefully. Formalizing repayment terms or converting some debt into equity can reduce short-term liabilities and improve working capital.

• Seek Additional Equity or External Financing:
  Strengthening the equity base through additional shareholder investment or external financing (e.g., bank loans, grants) would bolster the company’s "immune system," providing a buffer to withstand financial shocks and support growth.

• Asset Utilization and Monetization:
  Although fixed assets provide long-term stability, exploring options to monetize or leverage these assets (e.g., refinancing property, leasing) could generate cash to improve liquidity.

• Implement Robust Financial Controls:
  Establish regular financial monitoring and forecasting to detect early warning signs and manage liquidity proactively, ensuring the company can meet obligations as they fall due.

• Prepare Full Financial Statements:
  Including profit and loss accounts in future filings will provide a clearer picture of operational performance and profitability, enabling better-informed strategic decisions.

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