DORODVAND DEVELOPMENTS LTD

Executive Summary

DORODVAND DEVELOPMENTS LTD is experiencing liquidity challenges and declining equity, reflected in persistent negative working capital and a shrinking asset base. Immediate focus on improving cash flow management, cost control, and possibly capital injection is essential to restore financial health and ensure business sustainability.

DORODVAND DEVELOPMENTS LTD - Analysis Report

Company Number: 13056576

Analysis Date: 2025-07-19 12:53 UTC

Financial Health Assessment of DORODVAND DEVELOPMENTS LTD

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1. Financial Health Score: D

Explanation:
The company is showing signs of financial distress, primarily indicated by persistent negative net current assets (working capital deficit) over the last four years. While it remains solvent with positive shareholders' funds, the erosion of net assets and working capital deficits reflect ongoing liquidity challenges. This score reflects a vulnerable financial condition requiring urgent remedial action.

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2. Key Vital Signs

Metric	2024 Value (£)	Interpretation
Fixed Assets	4,822	Small base of long-term assets, indicating limited investment in property/equipment.
Current Assets	20,106	Relatively low liquid and short-term assets available to cover immediate obligations.
Current Liabilities	24,448	Short-term debts surpass current assets, indicating liquidity pressure.
Net Current Assets (Working Capital)	-4,342	Negative working capital signals cash flow stress and difficulty meeting short-term debts.
Total Assets Less Current Liabilities	480	Barely positive net assets, showing very thin equity buffer against liabilities.
Shareholders’ Funds (Equity)	480	Equity has sharply declined from £19,814 in 2020, indicating accumulated losses or withdrawals.
Average Employees	3	Small workforce, possibly reflecting downsizing or contraction of business operations.

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3. Diagnosis: Underlying Business Health

• Symptoms of Financial Distress:
  The company has persistently negative working capital from 2021 to 2024, meaning current liabilities exceed current assets. This is akin to a patient whose "blood pressure" (liquidity) is dangerously low, risking an inability to meet immediate financial obligations. This liquidity strain could lead to payment delays, supplier relationship damage, or insolvency if unaddressed.

• Erosion of Equity:
  The shareholders' funds have dropped from nearly £20,000 in 2020 to just £480 in 2024. This steady decline suggests the company has been incurring losses or distributing capital beyond its earnings, reducing its financial "immune system" against shocks.

• Reduced Asset Base:
  Fixed assets have decreased over the years, potentially due to asset sales or depreciation outpacing reinvestment, indicating shrinking operational capacity or divestment to meet cash needs.

• Workforce Contraction:
  The reduction in average employees from 9 to 3 aligns with a downsizing strategy or reduced business scale; this may impact operational effectiveness but also reduce overhead costs.

• Industry Context:
  Operating in domestic building construction, a sector often sensitive to economic cycles and cash flow timing, the company’s liquidity issues could be symptomatic of delayed project payments or increased costs.

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4. Recommendations: Path to Financial Wellness

• Improve Liquidity Management:
  Prioritize faster collection of receivables and negotiate extended payment terms with suppliers to improve working capital. Consider short-term financing options to bridge cash flow gaps.

• Cost Control and Operational Efficiency:
  Review overheads and streamline operations to reduce expenses without compromising project delivery quality. Maintain the current lean workforce unless justified by business growth.

• Capital Injection:
  The company may need equity infusion from shareholders or external investors to rebuild the equity buffer and strengthen the financial foundation.

• Asset Management:
  Assess fixed assets for potential underutilization; consider leasing or selling non-core assets to generate cash without impairing operational capacity.

• Strategic Business Review:
  Evaluate project profitability and client creditworthiness rigorously. Avoid overextension and focus on sustainable projects with predictable cash flows.

• Regular Financial Monitoring:
  Implement monthly financial reviews focusing on liquidity metrics to detect early warning signs and take corrective action promptly.

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Medical Analogy Summary:
DORODVAND DEVELOPMENTS LTD currently exhibits symptoms akin to a patient with weakened vital signs—negative working capital and shrinking equity are red flags signaling financial distress. Without appropriate treatment such as liquidity support and operational adjustments, the prognosis risks deterioration. However, with timely intervention, there is potential for stabilization and recovery.

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