E & T TRADING LTD

Executive Summary

E & T TRADING LTD currently exhibits poor financial health characterized by severe liquidity issues and negative net assets, indicating financial distress. Immediate focus on cash flow improvement, debt restructuring, and capital injection is essential to stabilize operations and avoid insolvency risk. With decisive action, the company can potentially improve its financial condition and secure a more stable future.

E & T TRADING LTD - Analysis Report

Company Number: 13945256

Analysis Date: 2025-07-29 19:11 UTC

Financial Health Assessment for E & T TRADING LTD

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1. Financial Health Score: D

Explanation:
The company shows significant financial distress symptoms, primarily due to the imbalance between its current assets and liabilities, leading to net current liabilities. This indicates liquidity issues. The score "D" reflects a below-average financial health status, warning signs of cash flow problems, and the urgent need for intervention.

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2. Key Vital Signs

Metric	2023	2022	Interpretation
Fixed Assets	£0	£0	No long-term asset base; limited investment in infrastructure or equipment.
Current Assets	£18	£843	Extremely low liquid assets; a symptom of poor working capital management.
Current Liabilities	£15,803	£20,245	High short-term debts; significant pressure on cash flow.
Net Current Assets (Liabilities)	-£15,785	-£19,402	Negative working capital, indicating inability to cover short-term debts with current assets — a critical warning sign.
Net Assets (Shareholders’ Funds)	-£16,385	-£20,002	Negative equity position, meaning liabilities exceed assets; signals financial distress.
Average Number of Employees	1	1	Very small scale, consistent with micro-entity status.

Interpretation of Vital Signs:

• The company's liquidity is critically low, with current liabilities overwhelmingly exceeding current assets. This is akin to a patient with dangerously low blood pressure—without sufficient "cash flow" to support daily operations, the company risks operational failure.
• Negative net assets imply the company is "underwater," with debts surpassing its total assets — a symptom often linked to insolvency risk.
• The lack of fixed assets suggests no buffer or collateral to support borrowing or long-term stability.
• The very small size and micro-entity classification limit complexity but also ability to absorb shocks.

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3. Diagnosis

The financial data reveals that E & T TRADING LTD is currently in a fragile financial state with symptoms of liquidity distress and negative equity. The company’s cash or near-cash resources are insufficient to cover its short-term debts, which endangers its operational continuity. The negative shareholders' funds indicate accumulated losses or liabilities greater than assets, a worrying sign of solvency issues. The small scale (one employee) and absence of fixed assets further constrain its ability to generate stable cash flow or raise financing.

Despite being active and filing accounts on time, the company's financial "vital signs" resemble a patient with chronic illness who requires immediate care to avoid crisis. Without prompt action, the prognosis for sustainable growth or recovery is poor.

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4. Prognosis

If current trends continue without remedial action, the company faces a high risk of financial failure or insolvency. The liquidity crunch and negative equity will likely worsen, limiting the company's ability to invest, pay suppliers, or survive unexpected shocks.

However, because the company is small and “micro” sized, there is potential for recovery through careful cash flow management, restructuring liabilities, or injecting fresh capital. The prognosis can improve significantly with targeted interventions.

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5. Recommendations

• Improve Cash Flow Management:
  Focus on accelerating receivables, delaying payables where possible, and minimizing unnecessary expenses. This will help stabilize the “circulatory system” of the business—its cash flow.

• Restructure Short-Term Debt:
  Negotiate with creditors to extend payment terms or convert some current liabilities into longer-term debt to ease immediate pressure.

• Capital Injection:
  Consider fresh equity investment or shareholder loans to restore positive net assets and improve liquidity.

• Cost Control and Business Model Review:
  With only one employee and minimal assets, review operational efficiency and explore ways to increase revenue or diversify income streams to build a healthier financial baseline.

• Regular Financial Monitoring:
  Establish monthly cash flow forecasts and key performance metrics to detect early warning signs and intervene quickly.

• Explore Professional Advice:
  Consulting with insolvency practitioners or financial advisors may provide restructuring solutions before distress worsens.

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