EMJAY DECOR LIMITED

Executive Summary

EMJAY DECOR LIMITED is currently showing financial symptoms of distress, including negative net assets and working capital deficits, reflecting liquidity and solvency challenges. The company holds significant fixed assets but suffers from cash shortages and accumulated losses. Immediate focus on cash flow management, capital strengthening, and operational efficiency is critical to restoring financial health and ensuring sustainable business operations.

EMJAY DECOR LIMITED - Analysis Report

Company Number: 13329114

Analysis Date: 2025-07-29 20:35 UTC

Financial Health Assessment for EMJAY DECOR LIMITED

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1. Financial Health Score: D

Explanation:
EMJAY DECOR LIMITED shows clear symptoms of financial distress, primarily due to negative net assets and working capital deficits. Although the company has tangible fixed assets and stock, its current liabilities significantly exceed current assets, indicating liquidity strain. The company is still active with no overdue filings, but the financial "vital signs" suggest a fragile condition requiring urgent attention.

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2. Key Vital Signs

Metric	2024 Value	Interpretation
Fixed Assets (Tangible)	£93,400	Healthy level of physical assets, mainly land, buildings, and fixtures, which represent a stable asset base.
Current Assets (Excl. Cash)	£125,364	Inventory (stocks) represents a major portion of current assets; however, cash position is negative (£-1,878), indicating cash flow challenges.
Cash at Bank and in Hand	-£1,878	Negative cash balance is a significant red flag, indicating potential overdrafts or cash shortages impacting daily operations.
Current Liabilities	£253,086	High short-term obligations compared to current assets indicate liquidity risk.
Net Current Assets	-£129,600	Negative working capital signals the company may struggle to meet short-term debts, a critical symptom of financial stress.
Net Assets (Shareholders’ Funds)	-£36,200	Negative net assets imply the company’s liabilities exceed its total assets, a serious concern for solvency.
Share Capital	£10,000	Reflects initial equity; however, insufficient to cover losses or liabilities.
Profit & Loss Reserve	-£36,300	Accumulated losses underline ongoing operational or financial challenges.

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3. Diagnosis

EMJAY DECOR LIMITED is currently exhibiting signs of financial distress akin to a patient with low vital signs and symptoms of systemic weakness:

• Liquidity Strain ("Poor pulse"): Negative net current assets and cash overdraft suggest the company is struggling to maintain a healthy cash flow. This "poor pulse" could lead to payment delays or inability to cover immediate expenses.
• Solvency Concerns ("Weak heart"): Negative net assets mean the business owes more than it owns, akin to a "weak heart" condition that threatens long-term viability.
• Asset Base ("Structural support intact"): The company holds tangible fixed assets of significant value, which could be leveraged or restructured to improve financial health.
• Loss Accumulation ("Chronic illness"): The growing deficit in retained earnings is indicative of chronic operational losses or insufficient profitability, requiring remedial strategies.

Overall, the company's financial health is compromised, and without intervention, it risks worsening liquidity problems and potential insolvency.

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4. Recommendations

Immediate Actions ("Emergency care"):

• Improve Cash Flow Management:
  Implement stricter control over receivables and payables to improve cash inflows and reduce cash outflows. Consider negotiating better payment terms with suppliers and customers.

• Address Negative Cash Position:
  Explore options to regularize the overdraft or secure short-term financing to stabilize liquidity and avoid disruption in operations.

• Inventory Review:
  Since stock forms the bulk of current assets, review inventory levels for obsolete or slow-moving items and consider discounting or selling excess stock to generate cash.

Structural Interventions ("Long-term treatment"):

• Capital Injection:
  Consider a shareholder or external investor capital injection to strengthen equity and restore positive net assets, helping to "strengthen the heart" of the business.

• Cost Reduction and Profit Improvement:
  Analyze operational costs and pricing strategies to return the company to profitability and stop the accumulation of losses.

• Asset Utilization:
  Evaluate options for leveraging fixed assets, such as sale and leaseback arrangements, to unlock cash without losing operational capacity.

• Financial Monitoring:
  Implement regular financial health checks and forecasting to detect early warning signs and manage symptoms proactively.

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