HOLDEN & CO (BARROW) LIMITED

Executive Summary

HOLDEN & CO (BARROW) LIMITED currently faces liquidity challenges and erosion of equity, indicating financial distress symptoms. The company must improve working capital management, reduce reliance on director funding, and focus on profitability to restore financial health and ensure sustainable operations.

HOLDEN & CO (BARROW) LIMITED - Analysis Report

Company Number: 12781098

Analysis Date: 2025-07-29 21:14 UTC

Financial Health Assessment of HOLDEN & CO (BARROW) LIMITED

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1. Financial Health Score: D

Explanation:
The company exhibits signs of financial strain, particularly in its liquidity position. Negative net current assets (working capital) in consecutive years indicate ongoing cash flow challenges. While the company remains solvent with positive shareholders’ funds, the margin is very thin and deteriorating. Overall, the company is currently struggling to maintain a healthy financial condition, scoring a D grade reflecting a degree of financial distress but not yet insolvency.

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2. Key Vital Signs

Metric	2024 (£)	Interpretation
Net Current Assets (Working Capital)	-941	Negative — current liabilities exceed current assets; a symptom of liquidity stress.
Shareholders’ Funds (Equity)	59	Positive but very low; minimal buffer to absorb losses or shocks.
Debtors (Receivables)	1,794	Small but increasing; reflects amounts owed by customers.
Current Liabilities	2,735	Slight increase from prior year; demands timely payment.
Fixed Assets (Net Book Value)	1,000	Tangible assets exist but depreciating; low asset base.
Director Loan Account	1,794	Interest-free loan from director; shows reliance on internal funding.

Interpretation of Vital Signs:

• The negative working capital is a red flag indicating potential cash flow difficulties to meet short-term obligations.
• The shareholders’ funds have nearly depleted from £117 in 2023 to £59 in 2024, signaling erosion of retained earnings or accumulated losses.
• The company is dependent on a director's loan to support operations, which is a sign of constrained external financing options.
• Fixed assets have been depreciated significantly, reducing tangible net worth.
• Debtors are increasing but remain modest, implying limited sales or slow growth.

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3. Diagnosis

Underlying Financial Health:

Much like a patient showing symptoms of weakening immunity, HOLDEN & CO (BARROW) LIMITED is demonstrating symptoms of financial distress primarily through insufficient liquidity and thin equity capital. The company’s current liabilities outpace its current assets, indicating difficulty in covering short-term debts from existing liquid resources. The reliance on director loans, while interest-free, underscores a fragile funding structure dependent on internal support rather than external creditworthiness.

The steady decline in net current assets and shareholders' funds suggests the company is either incurring losses or not generating sufficient profits to build reserves. The small size of the business (micro-category) and single director operation means it may have limited capacity to absorb shocks or invest for growth.

While the company is still classified as active and solvent, the thin buffer of equity and ongoing negative working capital are symptoms that if unaddressed could lead to cash flow crises or solvency issues in the near future.

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4. Recommendations

To improve financial wellness, the company should consider the following:

• Improve Liquidity Management:
  Implement tighter control on cash inflows and outflows. Accelerate collections of debtor balances and negotiate longer payment terms with creditors to restore positive working capital.

• Reduce Reliance on Director Loans:
  Explore options for external financing such as small business loans or grants to reduce dependency on unsecured director advances, which could be recalled at short notice.

• Cost Control and Profitability Focus:
  Conduct a detailed review of operational costs and pricing strategy to enhance profitability and build retained earnings. Consider targeted marketing or service diversification to increase turnover.

• Asset Utilisation Review:
  Assess fixed asset usage to ensure productive deployment or consider disposal of underutilized assets to raise cash if needed.

• Regular Financial Monitoring:
  Adopt monthly cash flow forecasting and management reporting to catch early signs of distress and take timely corrective action.

• Strategic Planning:
  Develop a business plan focusing on sustainable growth and financial resilience, including contingency plans for managing cash crunches.

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