GREEN TECH AUTOMOTIVE LTD

Executive Summary

GREEN TECH AUTOMOTIVE LTD is currently facing financial stress characterized by negative net assets and high related-party debt, despite adequate short-term liquidity. Immediate action is required to strengthen equity, manage debt, and improve operational profitability to ensure long-term viability. Close financial monitoring and strategic restructuring are recommended to restore health and reduce insolvency risk.

GREEN TECH AUTOMOTIVE LTD - Analysis Report

Company Number: 14402704

Analysis Date: 2025-07-20 18:24 UTC

Financial Health Assessment for GREEN TECH AUTOMOTIVE LTD (As at 31 October 2023)

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1. Financial Health Score: D

Explanation:
The company's financial indicators reveal significant distress signals, notably a negative net asset position and heavy reliance on long-term loans. While current assets are positive, the imbalance with liabilities and shareholders' funds indicates a fragile financial state that requires urgent attention.

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2. Key Vital Signs

Metric	Value (£)	Interpretation
Current Assets	15,960	Adequate short-term resources, but limited cash liquidity (£758).
Cash at Bank	758	Minimal cash reserves, indicating potential liquidity strain.
Debtors	15,202	Majority of current assets tied up in receivables; cash conversion risk.
Current Liabilities	38	Very low short-term debts, a positive sign for immediate liquidity.
Net Current Assets (Working Capital)	15,998	Healthy working capital suggests short-term obligations are covered.
Creditors Due After One Year	80,804 (Loan)	Large long-term debt representing a heavy financial burden.
Net Assets (Shareholders’ Funds)	-64,806	Negative net worth signals insolvency risk and financial distress.
Share Capital	1	Minimal equity base, indicating limited shareholder investment.
Profit & Loss Reserve	-64,807	Accumulated losses erode equity, indicating ongoing operational losses.

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3. Diagnosis: Financial Symptoms & Underlying Health

• Symptoms of Distress:
  The company shows a negative net asset position of approximately £64.8k, a critical symptom often described as "underlying financial anemia." This suggests accumulated losses and liabilities exceed its assets, a serious warning sign of insolvency risk.

• Liquidity Condition:
  Despite the low cash balance (£758), current liabilities are minimal (£38), and net current assets are positive (£15,998). This suggests short-term obligations are currently manageable, a "stable pulse" in liquidity terms.

• Debt Structure:
  The company has a significant long-term loan (£80,804) from a related party (AC Cars (England) Ltd). This loan is the main contributor to the negative net assets and represents a high "debt load" or "financial weight" that could impair future financial flexibility.

• Operational Performance:
  The lack of profit and significant accumulated losses indicate "chronic operational weakness." The business may be in a development or investment phase, which is common for new companies (incorporated 2022), but sustained losses are a red flag if unaddressed.

• Governance & Control:
  The company is controlled by AC Cars (England) Ltd (75-100% ownership), and Mr. Alan Lubinsky holds significant voting rights. This concentrated control could influence financial strategy but also poses risk of limited external oversight.

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4. Prognosis: Future Financial Outlook

• Given the current financial structure, the company is at risk of continued financial strain unless turnaround measures are implemented. The key challenge is to reduce reliance on related-party debt or convert it into equity to improve net asset position.

• The healthy working capital is a positive sign, but the minimal cash and accumulated losses mean cash flow management must be closely monitored to avoid liquidity crises.

• Without improved profitability or injection of fresh equity, the negative equity trend may worsen, increasing insolvency risk.

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5. Recommendations: Path to Financial Wellness

• Capital Injection: Consider equity infusion from shareholders or new investors to strengthen the balance sheet and reduce negative net assets.

• Debt Restructuring: Negotiate with AC Cars (England) Ltd to restructure or potentially convert the £80,804 loan into equity, alleviating long-term debt burden.

• Improve Cash Reserves: Implement tighter working capital management, accelerate debtor collections, and control cash outflows to boost liquidity.

• Operational Review: Conduct a detailed review of costs and revenues to identify areas to improve profitability and reduce losses.

• Monitoring & Reporting: Establish regular financial health monitoring akin to "medical check-ups," focusing on cash flow, debt levels, and profitability metrics.

• Governance Enhancement: Consider adding independent oversight or advisory input to ensure balanced financial decisions and risk management.

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