DEEP PATEL LTD
Executive Summary
Deep Patel Ltd is a small private dental practice operating with a single director and employee. The company remains solvent with positive net current assets, but liquidity has weakened notably with a sharp reduction in cash balances and increased reliance on intercompany balances. While regulatory compliance is current, further investigation into intercompany transactions and cash flow sustainability is advised to assess operational stability and risk exposure.
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This analysis is opinion only and should not be interpreted as financial advice.
DEEP PATEL LTD - Analysis Report
Risk Rating: MEDIUM
While Deep Patel Ltd maintains positive net current assets and shareholders’ funds, there is a notable deterioration in liquidity evidenced by a significant reduction in cash balances from £63,913 (2023) to £20,784 (2024). The increased current liabilities, particularly amounts owed to group undertakings, also contribute to the medium risk level.Key Concerns:
- Liquidity Decline: Cash reserves have diminished substantially over the last year, which may impact the company’s ability to meet immediate obligations.
- Related Party Balances: Large debtor and creditor balances with group undertakings (£69,216 and £62,638 respectively) raise concerns about dependency on affiliated entities and potential cash flow circularity.
- Thin Operating Base: The company employs only one person (the director), indicating limited operational scale which could affect sustainability and growth prospects.
- Positive Indicators:
- Positive Working Capital: The company reports positive net current assets (£16,830) and shareholders’ funds, indicating solvency.
- No Filing Overdue: All statutory filings including accounts and confirmation statements are up to date, reflecting regulatory compliance.
- Ownership and Control: The sole director and 100% shareholder is consistent, suggesting clear governance and control structures without apparent director turnover or disqualification.
- Due Diligence Notes:
- Review the nature of transactions with group undertakings to assess the quality and collectability of intercompany debts and the terms of intercompany liabilities.
- Investigate the cash flow trends and underlying business operations to understand causes of cash depletion and whether it is temporary or structural.
- Obtain management commentary on business plans and sustainability, given the limited employee base and reliance on related parties.
- Confirm if there are any contingent liabilities or off-balance sheet commitments not disclosed in the accounts.
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