DOMESTICHOMECARE LTD

Executive Summary

Domestichomecare Ltd is currently facing liquidity challenges with negative working capital and net liabilities, signaling financial distress. Immediate focus on cash flow improvement, cost control, and capital support is critical to stabilise the company’s financial health. Without corrective action, the risk of insolvency may increase over time.

DOMESTICHOMECARE LTD - Analysis Report

Company Number: 13231816

Analysis Date: 2025-07-29 14:13 UTC

Financial Health Assessment: DOMESTICHOMECARE LTD

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1. Financial Health Score: D

Explanation:
The company shows signs of financial distress with negative net current assets and net liabilities as of the latest financial year. This suggests liquidity challenges and a weakened financial position which lowers its ability to meet short-term obligations. The score reflects a below-average financial health but not yet critical insolvency.

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2. Key Vital Signs

Metric	2024 (£)	2023 (£)	Interpretation
Current Assets	9,639	9,638	Cash and short-term assets remain stable but low in absolute terms.
Current Liabilities	15,999	7,493	More than doubled in one year, indicating increased short-term debts or payables.
Net Current Assets	-6,360	2,145	Shift from positive to negative working capital signals cash flow strain.
Net Assets (Shareholders' Funds)	-6,360	2,145	Negative net assets mean liabilities exceed assets, indicating a possible solvency concern.
Share Capital	100	100	Nominal capital, typical for micro-entities, but small relative to liabilities.
Employees (Average)	1	1	Minimal workforce, possibly founder-led or very small scale operation.

Interpretation of Vital Signs:

• The negative net current assets ("working capital deficit") is a primary symptom of liquidity difficulty; the company does not have enough current assets to cover its short-term liabilities.
• The doubling of current liabilities in one year raises a red flag about increasing debts or unpaid obligations.
• The negative net assets position shows accumulated losses or liabilities outweighing assets, a symptom of financial distress and potential investor concerns.
• Stability in current assets but increase in liabilities suggests cash flow challenges rather than asset base deterioration.

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3. Diagnosis

Underlying Business Health:
Domestichomecare Ltd operates in the repair of electrical equipment sector with a micro-entity classification, meaning it is a very small company with minimal filing obligations. The financial data exposes symptoms of financial stress:

• The company’s liquidity is impaired as it cannot fully cover immediate debts with current assets, risking payment defaults or supplier disputes.
• The negative net assets point toward accumulated losses or undercapitalization, which could hamper future funding or credit access.
• The presence of only one employee and stable current assets suggests limited operational scale and possibly constrained revenue generation.
• The significant increase in current liabilities within a year may be due to delayed payments, increased borrowing, or accrued expenses not yet settled.

Given these signs, the company is exhibiting symptoms akin to a patient with "mild to moderate financial distress" — not yet in critical condition (insolvency) but requiring immediate attention to prevent deterioration.

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4. Recommendations

Steps to Improve Financial Wellness:

1. Improve Cash Flow Management:

   • Accelerate collection of receivables and negotiate extended payment terms with suppliers to ease liquidity pressure.
   • Avoid incurring new short-term liabilities without corresponding cash inflow.

2. Cost Control and Expense Review:

   • Carefully review all overheads and operating expenses to identify unnecessary costs that can be trimmed.

3. Seek Additional Capital Injection:

   • Consider capital injection by the shareholder or third-party investors to restore positive net assets and improve solvency.
   • Explore government grants or support schemes aimed at small businesses in the electrical repair sector.

4. Financial Monitoring and Forecasting:

   • Establish regular financial reporting and cash flow forecasting to anticipate liquidity gaps.
   • Set early warning indicators to detect worsening financial health symptoms.

5. Consider Strategic Partnerships or Diversification:

   • Explore collaborations to expand service offerings or access new customer segments to boost revenue.

6. Professional Advice:

   • Engage with a financial advisor or turnaround specialist to design a bespoke recovery plan.

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