ETERNAL ANUGRAHA LTD
Executive Summary
Eternal Anugraha Ltd is a newly formed wholesale company exhibiting weak financial health with persistent negative equity and inadequate liquidity. The company relies heavily on director loans and has limited operational scale, raising significant credit risk concerns. Without substantial capital strengthening or improved cash flows, extending credit is not advisable at this time.
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This analysis is opinion only and should not be interpreted as financial advice.
ETERNAL ANUGRAHA LTD - Analysis Report
Credit Opinion: DECLINE
Eternal Anugraha Ltd demonstrates significant financial weakness with persistent net liabilities and negative shareholders’ funds over the last two reported years. The company’s current liabilities substantially exceed current assets, resulting in negative working capital and net asset values. Furthermore, the company is relatively new, incorporated in 2022, with minimal operational history and only one director who also controls 75-100% of the shares and voting rights, indicating concentrated control but limited management depth. The director’s loan account forms the majority of current liabilities, which may limit the company’s ability to secure external financing. Given these factors, the company lacks sufficient financial strength and stability to support new credit facilities without substantial mitigating factors.Financial Strength:
- Net assets declined from -£3,556 in 2023 to -£4,764 in 2024, evidencing deteriorating equity position.
- Shareholders’ funds remain negative, reflecting accumulated losses (~£4,864 loss in P&L reserve).
- No fixed assets are reported; total assets consist solely of cash and negligible debtors.
- Current liabilities are primarily director’s loan account (£5,900 in 2024), indicating reliance on related-party funding rather than external creditors.
Overall, the balance sheet is weak with no tangible net worth or asset coverage against liabilities.
- Cash Flow Assessment:
- Cash reduced significantly from £5,884 in 2023 to £1,676 in 2024, showing cash burn concerns.
- Negative net current assets of -£4,764 highlight insufficient liquidity to meet short-term obligations.
- Absence of trade debtors implies limited receivables cycle but also low operational scale.
- The company’s working capital position is inadequate, increasing the risk of payment delays or defaults.
Liquidity is constrained, and cash flow from operations appears insufficient to service liabilities presently.
- Monitoring Points:
- Track quarterly cash flow and liquidity improvements to assess ability to cover current liabilities.
- Review director’s loan account movements for potential capital injections or repayments.
- Monitor any changes in equity structure or additional capital funding to strengthen net assets.
- Observe operational performance and turnover trends to evaluate prospects for profitability and cash generation.
- Watch for any director or related-party conduct issues given sole control and ownership.
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