DBSD LTD

Executive Summary

DBSD LTD exhibits signs of financial stress due to a slight working capital deficit and negative shareholders' funds, indicating accumulated losses and liquidity constraints. Immediate attention to cash flow management and equity strengthening is crucial to reversing these symptoms and restoring financial health. With prudent management and possible capital injection, the company can stabilize and maintain operations in the competitive construction sector.

DBSD LTD - Analysis Report

Company Number: 12481311

Analysis Date: 2025-07-20 12:05 UTC

Financial Health Assessment of DBSD LTD

---

1. Financial Health Score: D

Explanation:
DBSD LTD is exhibiting signs of financial stress primarily due to its negative net current assets and shareholders' funds over consecutive periods. While the company maintains substantial current assets, these are marginally outstripped by current liabilities, resulting in a working capital deficit. The continued negative equity position indicates accumulated losses or deficits that have not been offset by capital injections. The company’s micro-entity status and small employee base limit its financial complexity, but the persistent net liability state is a warning sign for sustainability without intervention.

---

2. Key Vital Signs

Metric	Latest (2024)	Interpretation
Current Assets	£776,049	Healthy asset base, primarily short-term assets (likely cash, receivables, inventory).
Current Liabilities	£784,754	Slightly higher than current assets, causing working capital deficiency.
Net Current Assets	-£8,705	Indicates a liquidity strain; company owes more short-term than it owns in liquid assets.
Shareholders’ Funds	-£8,705	Negative equity; company’s liabilities exceed assets, signaling accumulated losses or capital erosion.
Employee Count	2	Small workforce consistent with micro-entity classification.
Share Capital	£100	Minimal capital investment; limited buffer for absorbing losses.

---

3. Symptoms Analysis

• Working Capital Deficiency: The company’s current liabilities exceed its current assets by about £8,700. This is akin to the business having a short-term cash flow "deficit," which could make it difficult to meet immediate obligations without additional financing or asset liquidation.

• Negative Equity: The shareholders’ funds are negative and have deteriorated compared to the previous year (2023: -£7,119). This indicates accumulated losses or that the business has been running at a deficit. It is a symptom of financial distress and potentially eroding investor confidence.

• Small Capital Base: With only £100 in share capital, there is very limited equity capital to support the business operations or absorb losses, increasing reliance on liabilities or external funding.

• No Profit and Loss Details Provided: The lack of P&L information restricts full diagnosis but consistent negative equity suggests ongoing losses or insufficient profitability.

• Stable Employee Base: The company employs two people, which is stable but reflects limited operational scale and possibly limited revenue generation capacity.

---

4. Diagnosis

DBSD LTD’s financial "vitals" show a company under mild financial distress with symptoms including a working capital shortfall and a negative equity position. The business is "breathing" but struggling to maintain a healthy balance sheet. The working capital deficit, although small in absolute terms, indicates tight liquidity which, if unresolved, could impair the company’s ability to pay suppliers and short-term creditors on time.

The negative shareholders’ funds show a build-up of losses or insufficient capital injection since incorporation in 2020. This financial "weakness" suggests the company may be relying on external financing or deferrals to sustain operations.

Given the company’s sector (construction of domestic buildings) which often involves project-based cash flow timing challenges, these symptoms might reflect typical industry cash flow cycles but also flag the need for careful cash management and possibly restructuring equity or liabilities.

---

5. Prognosis

If these signs are not addressed, the company risks worsening liquidity issues and potential solvency challenges in the medium term. However, the current scale (micro-entity with modest liabilities) means recovery is possible with:

• Improved cash flow management,
• Strengthening capital through shareholder funding or retained earnings,
• Negotiating longer payment terms with creditors,
• Possibly diversifying or increasing revenue streams.

Without proactive management, the financial health could deteriorate, risking formal insolvency procedures.

---

6. Recommendations

• Improve Working Capital Management:
  Tighten control over receivables and payables to reduce the current liabilities pressure. Accelerate collection cycles and negotiate extended payment terms with suppliers.

• Inject Additional Equity Capital:
  Consider a capital injection from shareholders or new investors to restore positive equity and strengthen the balance sheet.

• Prepare Detailed Profit and Loss Accounts:
  Producing a full P&L will help identify cost centers and profitability issues, enabling targeted cost control or pricing adjustments.

• Monitor Cash Flow Forecasts:
  Implement regular cash flow forecasting to anticipate liquidity gaps and plan funding needs ahead of time.

• Explore Funding Options:
  If internal cash flow improvements are insufficient, consider short-term credit facilities or invoice financing to cover temporary deficits.

• Review Business Model and Project Pipeline:
  Given the construction industry’s cyclical nature, evaluate project acquisition and payment terms to ensure sustainable cash inflow.

---