ESTATE EIGHTY EIGHT LIMITED

Executive Summary

Estate Eighty Eight Limited is currently experiencing financial distress, marked by negative net assets and liquidity challenges. While it holds valuable fixed assets, the company faces significant short-term cash flow pressures and depends heavily on director loans. Immediate measures to improve liquidity, restructure debt, and inject capital are essential to stabilize financial health and support future growth.

ESTATE EIGHTY EIGHT LIMITED - Analysis Report

Company Number: 14007514

Analysis Date: 2025-07-29 20:58 UTC

Financial Health Assessment Report: ESTATE EIGHTY EIGHT LIMITED

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1. Financial Health Score: D

Explanation:
The company exhibits significant financial distress symptoms, primarily negative net assets and persistent working capital deficits. While it holds valuable fixed assets, the imbalance between current liabilities and current assets signals liquidity concerns. This score reflects a fragile financial state requiring prompt remedial action to restore health.

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2. Key Vital Signs

Metric	31-Mar-2024 Value	Interpretation
Net Current Assets (Working Capital)	-£51,229	Negative working capital indicates the company’s short-term obligations exceed its short-term assets, a symptom of liquidity stress.
Net Assets (Shareholders’ Funds)	-£15,584	Negative net assets imply the company’s liabilities surpass total assets, suggesting insolvency risk.
Current Assets	£5,684	Small current asset base, with cash of £4,724 providing limited immediate liquidity.
Current Liabilities	£106,855	High short-term liabilities, including significant director loans (£54,088), increasing pressure on cash resources.
Fixed Assets (Investment Property)	£142,500	Substantial long-term assets offering potential collateral, but illiquid and not readily convertible to cash.
Cash on Hand	£4,724	Modest cash reserves pose a risk for meeting near-term obligations.
Profit & Loss Reserves	-£15,584	Accumulated losses reflecting ongoing financial difficulties since incorporation.
Company Age	~2 years	Early-stage company with limited operating history; financial challenges not uncommon but require careful management.

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3. Diagnosis

Symptoms Analysis:

• Liquidity Strain: The company’s current liabilities exceed its current assets by a wide margin, indicating that short-term obligations (e.g., loans repayable within a year) cannot be met with available liquid resources. This is akin to a patient showing signs of dehydration—resources are insufficient to meet immediate needs.
• Balance Sheet Weakness: Negative shareholders’ funds and net liabilities point to financial distress, comparable to a body showing systemic weakness. The company’s total debts exceed total assets, reflecting potential insolvency risk.
• Asset-Liability Mismatch: While fixed assets (investment property) are substantial, they are not liquid and cannot easily be used to cover immediate debts. This is similar to having strong bones but weak muscles—structural strength exists, but functional capacity is impaired.
• Reliance on Director Loans: Over half of the current liabilities are loans from directors, indicating dependence on internal financing. This could be a double-edged sword—supportive but not a sustainable long-term funding source.
• No Employees: No staff implies low operational costs but also limited operational scale and revenue generation potential at this stage.

Overall Condition:
The company is in a precarious financial position with symptoms of liquidity distress and negative equity. The financial "vital signs" suggest the business is struggling to maintain solvency and operational stability, typical of early-stage companies under financial strain.

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4. Recommendations

1. Improve Liquidity:

   • Explore short-term financing options or restructuring of current liabilities to reduce immediate cash flow pressure.
   • Accelerate debtor collections and carefully manage payables.
   • Consider converting director loans into equity or longer-term debt to ease current liabilities.

2. Capital Injection:

   • Seek fresh equity investment to strengthen the capital base and eliminate negative net assets.
   • Engage existing shareholders or external investors for additional funding.

3. Asset Utilisation:

   • Evaluate the possibility of monetizing or refinancing the investment property to generate cash without losing asset control.
   • Use property as collateral for better lending terms if feasible.

4. Cost Management:

   • Maintain low overheads given zero employees but plan for sustainable growth and revenue generation to improve operating cash flow.

5. Financial Monitoring:

   • Implement robust cash flow forecasting and regular financial health reviews to detect and address distress symptoms early.
   • Engage professional advice for financial restructuring to avoid insolvency risks.

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