DJAZ PROPERTY LTD

Executive Summary

DJAZ PROPERTY LTD, a recently incorporated micro-entity in real estate and construction, shows early financial distress symptoms including negative net assets and poor liquidity. While such challenges are common in start-ups, immediate action to improve cash flow, restructure debt, and increase equity is critical to prevent worsening financial health. With targeted management interventions, the company can improve its outlook and build a sustainable financial foundation.

DJAZ PROPERTY LTD - Analysis Report

Company Number: 15157299

Analysis Date: 2025-07-29 18:18 UTC

Financial Health Assessment for DJAZ PROPERTY LTD (as of 30 September 2024)

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1. Financial Health Score: D

Explanation:
DJAZ PROPERTY LTD is a micro-entity in its first financial year of operation. The company shows symptoms of financial distress, with negative net assets and a significant working capital deficit. While start-up companies often experience initial losses or negative equity, the severity of current liabilities exceeding current assets and overall net liabilities signals caution. The financial health score of D reflects these early warning signs, suggesting the company is currently not in a healthy financial position and requires close monitoring and remedial action.

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2. Key Vital Signs

Metric	Value (£)	Interpretation
Fixed Assets	78,680	Represents investment in long-term assets, likely property-related given industry classification.
Current Assets	147	Extremely low short-term assets, indicating minimal liquid resources.
Current Liabilities	54,386	Short-term debts are very high relative to current assets, signaling liquidity strain.
Net Current Assets (Working Capital)	-35,353	Negative working capital indicates inability to cover short-term obligations with liquid assets.
Total Assets less Current Liabilities	43,327	Positive after subtracting current liabilities, but heavily impacted by long-term creditors.
Creditors due after one year	54,386	Long-term debt exceeds total assets less current liabilities, increasing solvency risk.
Net Assets (Shareholders Funds)	-11,059	Negative equity signals that liabilities exceed assets, a key symptom of financial distress.
Number of Employees	1	Very small team, consistent with micro-entity status.

Interpretation:

• The vital signs show a company with significant liabilities both short and long term, overshadowing its asset base.
• The minimal current assets suggest limited cash or near-cash resources to meet immediate liabilities, risking liquidity problems ("unhealthy cash flow").
• Negative net assets indicate the business is technically insolvent on a balance sheet basis, although this may reflect initial start-up costs and capital structure.
• The investment in fixed assets is relatively healthy but financed predominantly by creditors, which is risky.

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3. Diagnosis of Financial Condition

DJAZ PROPERTY LTD exhibits symptoms of financial distress, particularly liquidity and solvency challenges. The negative working capital and shareholders’ funds indicate that the company may struggle to meet short-term obligations without additional funding or asset sales. The reliance on creditor financing for fixed assets suggests a leveraged position that could strain cash flows.

However, as a new company incorporated in September 2023, some of these symptoms may be expected in the early stages as the business invests in property and construction assets before generating operational cash flow or profits. The single employee and micro-entity status align with a start-up phase.

Underlying Issues:

• Insufficient liquid assets to cover immediate liabilities ("cash flow cough").
• Negative equity reflects that the business is currently funded more by debt than owner's capital ("balance sheet fever").
• Potential risk of creditor pressure if the company cannot improve cash flows or restructure liabilities.
• The business operates in real estate letting and construction, industries that often require significant upfront capital and can experience cyclical cash flow patterns.

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4. Prognosis: Future Financial Outlook

The outlook depends heavily on management’s ability to:

• Generate positive operating cash flows through lettings or construction contracts.
• Secure additional equity or long-term financing to reduce liquidity pressure.
• Manage creditor relationships to avoid forced repayments or insolvency procedures.
• Scale operations prudently to improve profitability and working capital.

If these steps are taken, the company may stabilize and reverse negative equity over time. Without intervention, liquidity constraints could worsen, leading to insolvency risks.

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5. Recommendations to Improve Financial Wellness

• Increase Liquid Assets: Prioritize building cash reserves to cover short-term liabilities, possibly through additional capital injection or asset sales.
• Debt Restructuring: Negotiate with creditors to extend payment terms or reduce interest to ease current liabilities burden.
• Operational Cash Flow Focus: Accelerate revenue generation from property lettings and construction projects to create a healthy cash flow.
• Equity Injection: Consider bringing in more equity funding from owners or investors to improve net assets and strengthen the balance sheet.
• Cost Control: Monitor and reduce operating expenses to minimize cash burn during growth phase.
• Regular Financial Monitoring: Establish monthly cash flow forecasts and management accounts to detect early warning signs and respond promptly.
• Professional Advice: Engage with financial advisors or turnaround specialists if cash flow difficulties persist.

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