ENTOLI LTD

Executive Summary

ENTOLI LTD is showing early symptoms of financial distress with a notable decline in net assets turning negative and reduced cash reserves. While liquidity appears manageable currently, the company faces solvency challenges requiring immediate strategic and financial interventions. Addressing working capital discrepancies, restructuring debt, and improving operational profitability are critical to restoring financial health.

ENTOLI LTD - Analysis Report

Company Number: 13117419

Analysis Date: 2025-07-20 14:21 UTC

Financial Health Assessment for ENTOLI LTD (As at 31 March 2024)

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1. Financial Health Score: D

Explanation:
ENTOLI LTD exhibits several concerning signs in its financial "vital signs" that indicate distress. While the company maintains some liquidity with cash on hand, it has moved into a net liability position (negative net assets). This suggests its total liabilities exceed its total assets, a symptom akin to a patient showing signs of organ stress. The deterioration from positive net assets in prior years to negative signals financial strain, warranting a cautious outlook.

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2. Key Vital Signs: Critical Metrics & Their Interpretation

Metric	2024 Value	Interpretation
Current Assets	£18,806	Decreased from prior years, indicating less short-term asset coverage.
Cash at Bank	£16,535	Healthy cash reserves but declined from £21,102 in 2023, reducing buffer for operations.
Debtors	£2,271	Stable but relatively small, indicating limited receivables.
Current Liabilities	£24,000	Constant at £24k, exceeding current assets, indicating short-term liquidity pressure.
Net Current Assets (Working Capital)	£16,829	Reported as positive but this appears inconsistent with current assets and liabilities figures; likely includes long-term creditors. Needs clarification.
Creditors (Non-Current Liabilities)	£24,000	Significant long-term liabilities affecting solvency.
Net Assets (Total Equity)	-£7,171	Negative net assets showing that liabilities exceed assets; symptom of financial distress.
Shareholders’ Funds	-£17,171	Indicates accumulated losses beyond initial capital, weakening the financial foundation.
Stock	£0 (down from £8,700 in 2023)	Inventory fully depleted, possibly reflecting operational changes or asset write-downs.

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3. Diagnosis: What the Financial Data Reveals

• Liquidity Status: The company holds a reasonably stable cash position (£16,535), which is crucial for meeting immediate financial obligations. However, a decline in cash compared to previous years is a symptom of tightening cash flow.

• Working Capital & Short-Term Health: Although net current assets are reported as positive (£16,829), this seems inconsistent with the sum of current assets (£18,806) minus current liabilities (£24,000), which would imply a negative working capital (~ -£5,194). This discrepancy likely arises from classification of creditors or accounting presentation and should be clarified. If truly negative, this signals a liquidity crunch—akin to a patient with low blood pressure requiring urgent intervention.

• Solvency & Balance Sheet Strength: The company’s net assets have turned negative (-£7,171), compared to positive equity in prior years. This indicates accumulated losses have eroded shareholder funds, a critical symptom of financial distress that threatens the company’s long-term viability.

• Stock Position: The elimination of stock from £8,700 to £0 might indicate asset liquidation or changes in business operations. This could be a deliberate move to improve liquidity or a sign of reduced operational scale.

• Revenue & Profitability: The absence of a profit and loss account in the filed accounts limits insight into operational performance. However, accumulated losses in reserves suggest ongoing or recent periods of unprofitability.

• Directors & Control: The company is managed by three directors with relevant IT and engineering experience. Control is shared with Brandon Group Limited holding 25-50% shares and voting rights, indicating some external influence and possibly support.

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4. Recommendations: Specific Actions to Improve Financial Wellness

• Clarify Working Capital Position: Verify the classification and maturity of liabilities and assets to ensure accurate understanding of liquidity. This is like performing a detailed blood test to pinpoint abnormalities.

• Improve Cash Flow Management: Tighten control over cash outflows and seek to accelerate receivables. Consider short-term financing or credit facilities to buffer operational cash needs.

• Restructure Debt: Negotiate with creditors, especially for the £24,000 long-term liabilities, to seek more favorable repayment terms or refinancing to alleviate solvency stress.

• Operational Review: Analyze business operations to identify causes of losses. Consider cost-cutting, pricing adjustments, or revenue enhancement strategies akin to lifestyle changes prescribed for a patient to improve health.

• Build Reserves: Plan for rebuilding shareholder funds through retained earnings or capital injections to restore balance sheet strength.

• Regular Financial Monitoring: Implement more frequent financial reviews and projections to detect and address symptoms of financial distress early.

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