EVERGREEN LIVING SPACES LTD

Executive Summary

Evergreen Living Spaces Ltd is experiencing significant financial strain characterized by negative working capital and shareholder equity, indicating liquidity and solvency challenges. Immediate focus on cash flow management, capital injection, and cost control is essential to prevent further deterioration and support recovery. Without corrective action, the company risks insolvency despite currently maintaining compliance and active status.

EVERGREEN LIVING SPACES LTD - Analysis Report

Company Number: 12720099

Analysis Date: 2025-07-20 18:44 UTC

Financial Health Assessment: EVERGREEN LIVING SPACES LTD

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1. Financial Health Score: D

Explanation:
The company exhibits significant financial distress symptoms, notably persistent negative net current assets and shareholders' funds, indicating insolvency concerns. While still active and compliant with filings, the overall financial condition is poor and requires urgent corrective action to prevent worsening viability.

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2. Key Vital Signs

Metric	Latest (2024) Value	Interpretation
Fixed Assets	£28,443	Moderate investment in long-term assets, consistent with industry.
Current Assets	£2,995	Very low cash/short-term assets; insufficient for liabilities.
Current Liabilities	£106,689	High short-term debts; significantly outweigh current assets.
Net Current Assets (Working Capital)	-£103,694	Negative by a wide margin; indicates poor liquidity and cash flow.
Total Assets Less Current Liabilities	-£75,251	Negative; company owes more than it owns after deducting short-term debts.
Shareholders Funds (Equity)	-£75,251	Negative equity; accumulated losses exceed capital invested.
Average Number of Employees	4	Small workforce, typical for micro category.

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3. Diagnosis: Symptoms Analysis

• Negative Net Current Assets ("Cash Flow Deficiency"): The company’s current liabilities far exceed its current assets, demonstrating a serious liquidity problem. This is akin to a patient whose vital fluids are critically low, signaling immediate distress.

• Negative Shareholders' Funds ("Balance Sheet Weakness"): The company’s liabilities outstrip its total assets, reflecting accumulated losses. The business has been "operating at a loss" over time without adequate capital injections or profit recovery.

• Declining Fixed Assets: Fixed assets have decreased from £39,040 in 2021 to £28,443 in 2024, potentially indicating asset disposals, which could be cash-raising attempts or operational downsizing.

• No Audit Requirement & Micro Entity Status: While the company benefits from simplified reporting, this limits the depth of scrutiny, possibly masking deeper issues.

• Industry Risk Factors: Joinery and construction installation activities often involve project-based cash flows, which can exacerbate working capital challenges if payments are delayed.

The financial “symptoms” strongly suggest the company is struggling to maintain solvency and effective cash management, risking operational continuity without intervention.

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4. Prognosis: Future Financial Outlook

If current trends persist:

• The company is at risk of insolvency due to insufficient liquidity to meet obligations.
• Negative equity may deter investors or lenders, restricting access to funding.
• Without improved cash flow or capital infusion, operational constraints may intensify, potentially leading to administration or liquidation.

However, with prompt action, the prognosis can improve.

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5. Recommendations: Prescriptions for Financial Wellness

1. Urgent Cash Flow Management:

   • Closely monitor receivables and accelerate collections.
   • Negotiate extended payment terms with suppliers to ease short-term pressure.
   • Consider short-term financing options (e.g., invoice factoring) to bridge liquidity gaps.

2. Capital Injection:

   • Infuse additional equity or secure shareholder loans to strengthen the balance sheet and restore positive net assets.

3. Cost Control:

   • Review and reduce overheads and discretionary spending.
   • Optimize workforce deployment without compromising project delivery.

4. Asset Review:

   • Assess fixed assets for potential sale or leaseback to generate cash without harming operations.

5. Financial Planning & Reporting Improvement:

   • Implement detailed cash flow forecasting to anticipate liquidity needs.
   • Seek professional advice for restructuring or turnaround strategies.

6. Stakeholder Communication:

   • Maintain transparent communication with creditors and suppliers to manage expectations and build trust.

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Medical Analogy Summary

Evergreen Living Spaces Ltd currently shows "symptoms of financial distress" akin to a patient with low blood pressure and weakened immune response. The "vital signs" — negative working capital and shareholder equity — indicate a serious health crisis. Without immediate "treatment" in the form of cash flow management and capital support, the company faces a high risk of "organ failure" (insolvency). Early intervention can stabilize and potentially restore financial health.

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