ESSA CARS LTD

Executive Summary

Essa Cars Ltd is currently in a critical financial state with persistent negative net assets and inadequate short-term liquidity, indicating insolvency risks. Immediate capital support and debt management are essential to restore financial health and avoid insolvency proceedings. Without prompt intervention, the company’s financial viability remains severely compromised.

ESSA CARS LTD - Analysis Report

Company Number: 13972274

Analysis Date: 2025-07-20 11:15 UTC

Financial Health Assessment of Essa Cars Ltd as of 31 March 2024

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1. Financial Health Score: Grade F

Explanation:
Essa Cars Ltd exhibits severe financial distress with persistent negative net assets and substantial current liabilities exceeding current assets by over £25,000. The company’s financial position shows no signs of recovery from prior years, indicating critical financial health issues.

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2. Key Vital Signs

Metric	2024 Value (£)	Interpretation
Current Assets	233	Very low liquid assets available
Current Liabilities	25,445	High short-term debts due
Net Current Assets	-25,212	Negative working capital (deficit)
Net Assets (Shareholders’ Funds)	-25,212	Company is insolvent on balance sheet
Average Number of Employees	2	Small operational scale

Interpretation:

• Negative Working Capital ("symptom of distress") indicates the company’s short-term obligations significantly exceed its short-term resources, risking inability to meet immediate debts.
• Negative Net Assets ("critical illness") reveal that total liabilities surpass total assets, meaning the company’s net worth is below zero, a hallmark of insolvency.
• Minimal Current Assets ("weak vital signs") like cash or receivables at £233 are insufficient to cover even a fraction of the current liabilities.
• Consistency of negative net assets over three years suggests a chronic underlying financial problem rather than a one-off issue.

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3. Diagnosis

Essa Cars Ltd is in a critical financial condition resembling a patient with advanced systemic failure. The company is insolvent with liabilities far exceeding assets, indicating that it does not have the financial "reserves" to support ongoing operations without intervention. The lack of liquidity and persistent negative equity highlights an inability to cover debts, which puts the company at high risk of insolvency proceedings if corrective actions are not taken promptly.

The company’s small size and limited equity cushion suggest it is vulnerable to even small financial shocks. The turnover and profit data are not available, but the balance sheet alone shows that the company is financially unwell.

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4. Recommendations

To improve the financial wellness of Essa Cars Ltd, the following actions are strongly advised:

• Immediate Capital Injection: The company needs fresh equity or shareholder loans to restore positive net assets and improve liquidity — akin to administering a life-saving infusion.
• Debt Restructuring: Engage with creditors to renegotiate terms or defer payments to reduce immediate cash flow pressures ("relieving cardiac stress").
• Operational Review: Conduct a thorough review of business operations to identify cost reductions and improve cash flow management. Reducing cash burn is essential to stabilize finances.
• Financial Monitoring: Implement rigorous financial controls and regular cash flow forecasting to detect early signs of financial distress in future periods.
• Seek Professional Advice: Consult insolvency practitioners or financial advisors to explore restructuring options or formal insolvency procedures if recovery is not feasible.
• Consider Strategic Changes: Evaluate business model, pricing, or market positioning to improve revenue generation and profitability.

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