DEEN PHARM LTD

Executive Summary

DEEN PHARM LTD has experienced a significant downturn in financial health as of August 2024, with negative working capital and shareholders' funds signaling liquidity and solvency challenges. Immediate actions focusing on cash flow improvement, cost control, and potential capital injection are essential to restore financial stability and prevent insolvency risks.

DEEN PHARM LTD - Analysis Report

Company Number: 13595494

Analysis Date: 2025-07-29 21:15 UTC

Financial Health Assessment for DEEN PHARM LTD (as of 31 August 2024)

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1. Financial Health Score: D

Explanation:
The company shows clear symptoms of financial distress in the latest year with negative net assets and net current assets, indicating a weakened financial position. While it was financially stable in prior years, the current year's deterioration suggests liquidity and solvency challenges. The score of D reflects significant concern but not yet critical failure, warranting prompt remedial action.

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2. Key Vital Signs

Metric	2024 (£)	2023 (£)	Interpretation
Current Assets	3,945	11,792	Sharp reduction in liquid and short-term resources (cash, debtors).
Current Liabilities	12,092	10,670	Increase in short-term obligations, pressure on liquidity.
Net Current Assets (Working Capital)	-8,147	1,122	Negative working capital indicates cash flow "symptoms of distress".
Net Assets (Equity)	-8,668	472	Negative equity signals insolvency risk; liabilities exceed assets.
Shareholders Funds	-8,668	472	Reflects accumulated losses or capital erosion, undermining financial stability.
Average Number of Employees	2	2	Stable headcount, small scale consistent with micro-entity status.

Interpretation of Vital Signs:

• The drastic drop in current assets combined with rising current liabilities reveals a liquidity crunch. The company may struggle to meet short-term debts, a key warning sign akin to a patient’s dangerously low blood pressure.
• The shift from positive to negative net assets (equity) is a critical symptom of capital exhaustion and potential insolvency risk.
• Despite stable employee numbers, the financial strain suggests operational or market challenges impacting cash flow and profitability.

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3. Diagnosis

Financial Condition:
DEEN PHARM LTD’s financial health has significantly deteriorated over the most recent year. Previously, the company maintained positive working capital and modest positive equity, indicating a "healthy cash flow" and balanced financial structure. However, the 2024 accounts reveal a "symptom of distress": negative net current assets and net liabilities exceeding assets.

This condition suggests the company is potentially over-leveraged or experiencing operational losses leading to depletion of resources. The negative shareholders' funds imply accumulated losses or insufficient capital injection, weakening the company’s financial resilience.

The liquidity position is precarious, which could impair the company’s ability to fund day-to-day operations or service debts, increasing the risk of insolvency if not addressed.

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4. Recommendations

To improve financial wellness and stabilize the business, DEEN PHARM LTD should consider the following steps:

1. Cash Flow Management:

   • Tighten credit control to improve cash collections and reduce debtor days.
   • Negotiate extended payment terms with suppliers to ease short-term cash demands.
   • Explore short-term financing options to bridge liquidity gaps.

2. Cost Control and Profitability:

   • Review operational expenses to identify non-essential costs that can be trimmed without harming core activities.
   • Analyze product/service profitability to focus on higher-margin lines or customers.

3. Capital Injection:

   • Consider raising additional equity capital from shareholders or external investors to restore positive net assets and strengthen the balance sheet.

4. Financial Monitoring:

   • Implement regular financial health "check-ups" to monitor liquidity ratios, working capital, and equity position to catch early symptoms of distress.

5. Professional Advice:

   • Engage with financial advisors or restructuring specialists to explore turnaround strategies and prevent further deterioration.

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