DAK'N'DEV LIMITED

Executive Summary

DAK'N'DEV LIMITED possesses a strong asset foundation through its investment property but is experiencing ongoing liquidity challenges indicated by a significant working capital deficit. While solvent overall, the company must address cash flow management and debt structure to avoid financial distress. Strategic actions to improve liquidity and possibly restructure debt will enhance long-term financial wellness.

DAK'N'DEV LIMITED - Analysis Report

Company Number: 12440756

Analysis Date: 2025-07-20 12:35 UTC

Financial Health Assessment for DAK'N'DEV LIMITED

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1. Financial Health Score: C

Explanation:
DAK'N'DEV LIMITED demonstrates a mixed financial condition. While it owns substantial fixed assets (investment property valued at £780,000) and has positive net assets (£155,140), the company shows a persistent and significant working capital deficit (net current liabilities of approximately £277,000). This suggests liquidity stress despite a solid asset base. The company is solvent but exhibits symptoms of cash flow challenges.

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2. Key Vital Signs

Metric	Value (2024)	Interpretation
Current Assets	£6,465	Very low; primarily cash (£6,272), minimal debtors (£193). Indicates limited liquid resources.
Current Liabilities	£314,180	Very high short-term obligations, greatly exceeding current assets, indicating liquidity risk.
Net Current Assets (Working Capital)	-£276,889	Negative working capital signals potential difficulty meeting short-term debts as they fall due.
Fixed Assets (Investment Property)	£780,000	Strong asset base; property revalued with slight decline (£20,000 down from prior year).
Total Assets Less Current Liabilities	£503,111	Positive, indicating overall asset base covers short-term debts and more.
Long-Term Creditors	£314,180	Significant long-term debt, likely secured against investment property; repayment terms critical.
Net Assets (Equity)	£155,140	Positive equity indicates solvency but has decreased slightly from previous year (£161,841).
Revaluation Reserve	£177,848	Reflects accumulated unrealised gains on investment property; decreased by £20,000 this year.
Retained Earnings	-£22,808	Negative, indicating accumulated losses or distributions exceeding profits over time.
Cash at Bank	£6,272	Low cash reserves, a symptom of tight liquidity.
Share Capital	£100	Minimal paid-up capital, typical for small private companies.

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3. Diagnosis: Financial Health Overview

DAK'N'DEV LIMITED has a "healthy" core asset base through its investment property, which serves as a vital organ sustaining the company's net worth and solvency. However, it displays clear symptoms of liquidity distress with consistently large negative working capital over the past years (approximately -£277k to -£290k). This suggests the company may struggle to cover its short-term obligations on time without refinancing or generating additional cash inflows.

The negative retained earnings balance points to a history of operating losses or distributions exceeding profits, which can weaken the business's internal financial reserves. The slight decline in property valuation by £20,000 signals mild market or asset depreciation but not an acute deterioration.

The long-term creditors' balance is substantial and stable, indicating the company carries significant debt likely secured on its investment property. This creates a reliance on the property's value and rental income for debt servicing.

Together, these factors paint a picture of a company with solid solvency but challenged liquidity, somewhat akin to a patient with a strong heart (asset base) but poor blood circulation (cash flow). Without improving short-term cash management or restructuring debt, financial strain could intensify.

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4. Recommendations

1. Improve Working Capital Management:

   • Prioritise collecting any outstanding receivables swiftly and consider negotiating extended payment terms with creditors to ease immediate cash outflows.
   • Explore short-term financing options such as an overdraft facility or invoice financing to smooth liquidity gaps.

2. Review Debt Structure:

   • Assess current loan terms and consult with lenders about potential refinancing or restructuring to reduce short-term liabilities.
   • Evaluate whether selling non-core assets or raising equity could reduce debt burden.

3. Enhance Cash Flow Forecasting:

   • Implement robust cash flow monitoring to anticipate and manage liquidity crunches proactively.
   • Consider cost control measures and expense optimisation to conserve cash.

4. Capital Injection:

   • Given minimal share capital and negative retained earnings, consider bringing in additional equity capital to strengthen the financial base.

5. Regular Asset Valuation and Risk Assessment:

   • Monitor investment property valuations and market conditions closely to anticipate any impairment risks.
   • Maintain adequate insurance and contingency planning for property-related risks.

6. Seek Professional Financial Advisory:

   • Engage with financial advisors or accountants specialising in real estate businesses to optimise tax, debt, and asset management strategies.

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