DEAN DUGDALE (LANCING) LTD

Executive Summary

DEAN DUGDALE (LANCING) LTD is experiencing financial strain with negative working capital and shareholders’ funds, indicating liquidity challenges and accumulated losses. The company relies heavily on related party funding to maintain operations. Immediate focus on cash flow improvement, cost control, and capital strengthening is essential to restore financial health and ensure long-term viability.

DEAN DUGDALE (LANCING) LTD - Analysis Report

Company Number: 13828088

Analysis Date: 2025-07-29 19:53 UTC

Financial Health Assessment for DEAN DUGDALE (LANCING) LTD

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1. Financial Health Score: D

Explanation:
The company exhibits concerning signs of financial distress, primarily reflected in its negative net current assets and shareholders’ funds over the last three years. Although it remains active and solvent, the persistent working capital deficit and erosion of equity suggest underlying liquidity and capital structure challenges. The score "D" indicates the company is struggling but not yet at critical risk of insolvency.

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2. Key Vital Signs

Metric	2024 (£)	2023 (£)	Interpretation
Current Assets	364,088	290,847	Slight growth, mainly inventory (stocks)
Cash	1,452	3,371	Very low cash reserves—a symptom of tight liquidity
Debtors	886	4,706	Reduction in receivables may indicate collection issues or lower sales
Current Liabilities	369,129	293,195	Increased liabilities, mostly owed to related parties
Net Current Assets (Working Capital)	-5,041	-2,348	Negative working capital — sign of cash flow strain
Shareholders’ Funds (Equity)	-5,141	-2,448	Negative equity — indicates accumulated losses

Interpretation of Vital Signs:

• The company’s negative net current assets mean it owes more in the short term than it has in liquid and near-liquid assets. This is like a patient whose vital signs show low blood volume despite recent intake—it suggests the firm is struggling to cover immediate obligations.
• The negative shareholders’ funds indicate the company’s liabilities exceed its assets, a symptom of ongoing financial stress or losses.
• Low cash on hand signals poor liquidity and potential difficulty in meeting day-to-day expenses.
• The bulk of current liabilities are amounts owed to group undertakings (related parties), which may provide some breathing room but also signals dependency on external support.

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3. Diagnosis

Overall Financial Condition:
DEAN DUGDALE (LANCING) LTD is currently in a fragile financial state, characterized by persistent negative working capital and shareholders’ equity deficits. The company appears reliant on related party funding to meet its obligations, a temporary measure akin to a patient relying on external life support. The inventory (stocks) levels are relatively high compared to cash and debtors, potentially tying up capital in non-liquid assets.

The directors acknowledge going concern based on continued financial support from creditors and directors, indicating the company is not self-sustaining yet. The absence of an audit and limited disclosure restricts a complete picture, but the signs indicate the company needs to improve cash flow management and reduce liabilities to avoid liquidity crises.

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4. Recommendations

To improve financial wellness and strengthen the company’s financial health, the following actions are advised:

1. Improve Liquidity Management:

   • Accelerate collection of debtors and review credit terms with customers.
   • Evaluate inventory management to reduce stock levels and free up cash.
   • Monitor cash flow daily to avoid surprises and prepare for shortfalls.

2. Reduce Reliance on Related Party Funding:

   • Develop a plan to gradually repay or restructure amounts owed to group undertakings.
   • Seek alternative financing options such as business loans or equity injection if feasible.

3. Strengthen Capital Structure:

   • Consider capital injection from shareholders to restore positive equity.
   • Evaluate operational profitability to generate retained earnings and rebuild reserves.

4. Cost Control and Operational Efficiency:

   • Review overheads and operating costs to reduce cash burn.
   • Focus on profitable projects (noted from SIC codes: real estate development and letting).

5. Regular Financial Monitoring and Reporting:

   • Implement monthly management accounts to track key financial metrics.
   • Engage financial advisors for strategic planning and risk mitigation.

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Medical Analogy Summary

Think of DEAN DUGDALE (LANCING) LTD as a patient with symptoms of financial distress—low cash flow (the blood supply), negative working capital (oxygen delivery problem), and negative equity (organ function impairment). While currently stable due to external support (life support), without intervention to restore liquidity and capital strength, the risk of financial collapse (insolvency) increases. Immediate treatment focusing on improving cash flow and reducing liabilities is critical for recovery.

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