EHSAN & SONS LTD

Executive Summary

EHSAN & SONS LTD exhibits a stable but leveraged financial position with significant fixed assets and positive working capital, indicating reasonable liquidity. However, the company's very low equity base and high creditor levels suggest cautious management is needed to avoid financial distress. Strengthening equity and managing debt will be key to improving its financial health.

EHSAN & SONS LTD - Analysis Report

Company Number: 13445431

Analysis Date: 2025-07-29 17:41 UTC

Financial Health Assessment for EHSAN & SONS LTD (as of 30 June 2024)

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1. Financial Health Score: C

Explanation:
The company shows stable asset levels and modest growth in net assets, indicating some financial resilience. However, the company's high level of liabilities relative to assets, particularly long-term creditors, and a very low equity base signify caution. The financial "vital signs" suggest the business is financially stable but vulnerable, akin to a patient with controlled chronic conditions requiring close monitoring and management.

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2. Key Vital Signs

Metric	Value (£)	Interpretation
Fixed Assets	316,403	The company holds significant long-term assets, likely property as per the SIC code.
Current Assets	114,711	Short-term assets (cash, receivables) are modest but steady.
Current Liabilities	424,822	High short-term debts exceeding current assets, indicating working capital pressure.
Net Current Assets (Working Capital)	114,278	Positive working capital, suggesting the company can cover short-term obligations without distress.
Creditors (Due After One Year)	424,822	Substantial long-term liabilities, indicating financial leverage or loans.
Net Assets (Equity)	5,959	Very low shareholder equity relative to assets and liabilities, indicating thin capital buffer.
Share Capital	4	Minimal paid-in capital, typical for a micro-entity but limits financial strength.
Employee Count	0	No employees, implying minimal operational overhead but also limited growth potential.

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3. Diagnosis

• Balance Sheet Condition: The company maintains a stable asset base primarily in fixed assets (likely property). However, liabilities, especially long-term creditors, are very high relative to equity, which signals financial leverage akin to a patient relying heavily on medication to maintain function.

• Liquidity & Working Capital: Positive net current assets indicate the company can meet short-term liabilities, a symptom of healthy cash flow management. This is a good sign that the company is not in immediate distress.

• Equity Position: The extremely low net assets and shareholder funds suggest a fragile financial condition. The business has minimal equity cushion to absorb shocks, meaning any downturn or unexpected expenses could quickly lead to financial distress.

• Operational Activity: With no employees, the company's operations seem minimal or managed through contractors/outsourcing. This low operational footprint limits business risk but also growth potential.

• Industry Context: Operating in real estate letting and management, stable fixed assets and positive working capital are expected. However, the high level of creditors could mean significant debt financing, which requires careful servicing.

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4. Recommendations

• Enhance Equity Base: Consider injecting additional capital or retaining earnings to build a stronger equity buffer. This will improve financial resilience and borrowing capacity.

• Debt Management: Review long-term creditor agreements to negotiate better terms or refinance to reduce interest burden and improve cash flow stability.

• Cash Flow Monitoring: Maintain vigilant tracking of working capital to ensure ongoing liquidity, especially given the high current liabilities.

• Operational Strategy: Explore opportunities to increase operational activity or diversify income streams, potentially by adding staff or scaling services, to improve profitability and reduce reliance on debt.

• Financial Reporting & Planning: Continue timely and accurate filing of accounts and returns, and consider preparing management accounts regularly for early detection of financial stress symptoms.

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