HOLMES EDGE PROPERTY RENTALS LIMITED

Executive Summary

Holmes Edge Property Rentals Limited is currently experiencing financial strain, characterized by negative working capital and shareholders’ funds, indicating underlying liquidity and solvency challenges. The business is heavily reliant on directors and connected parties for funding, posing a risk if this support is withdrawn. To regain financial health, management should focus on improving cash flow, reducing dependency on internal loans, and optimizing asset utilization while maintaining diligent financial oversight.

HOLMES EDGE PROPERTY RENTALS LIMITED - Analysis Report

Company Number: 14412630

Analysis Date: 2025-07-29 14:42 UTC

Financial Health Assessment Report
Company: Holmes Edge Property Rentals Limited
Assessment Date: Year ended 31 October 2023

---

1. Financial Health Score: D

Explanation:
The company shows signs of financial strain, with net current liabilities and negative shareholders' funds indicating a fragile financial position. While it remains operational (going concern), the balance sheet reflects symptoms of financial distress that require management attention to ensure recovery and sustainability.

---

2. Key Vital Signs

Metric	Value	Interpretation
Current Assets	£105,466	Adequate short-term resources, primarily stock (£102,350), but limited cash (£254).
Current Liabilities	£109,529	Short-term obligations slightly exceed current assets, causing working capital deficit.
Net Current Assets	-£4,063	Negative working capital indicates potential liquidity issues; short-term debts exceed assets.
Total Assets Less Current Liabilities	-£3,863	Overall asset base after short-term debts is negative, signaling financial stress.
Shareholders’ Funds	-£3,963	Negative equity means liabilities outweigh assets; company is effectively "underwater."
Cash Balance	£254	Very low cash reserves suggest limited immediate liquidity.
Debtors (including connected companies)	£2,862	Minimal receivables, some from connected companies, potentially reliant on intra-group support.
Directors’ Loans and Other Creditors	£107,028	Significant loans from directors and connected companies, indicating reliance on internal funding.

---

3. Diagnosis: Financial Condition Overview

Holmes Edge Property Rentals Limited is a young company (incorporated October 2022) operating within the property rental sector. The company's financial "vital signs" show several "symptoms of distress":

• Negative Working Capital: The company’s current liabilities exceed its current assets by £4,063, indicating a liquidity crunch that could impair its ability to meet short-term obligations without additional funding.

• Negative Net Assets/Equity: With shareholders’ funds at -£3,963, the company is technically insolvent on a balance sheet basis. This means liabilities exceed assets, a critical warning sign that the business is financially unstable.

• Low Cash Reserves: Cash on hand is minimal (£254), which is not sufficient to cover daily operational expenses or unexpected costs. This "weak pulse" in cash flow may cause operational difficulties if not remedied.

• Reliance on Directors’ Loans and Connected Party Funding: A large portion of current liabilities (£73,251 in directors’ loans and £34,777 due to connected companies) suggests the company depends heavily on related parties for liquidity support. This can be a double-edged sword—while it shows internal backing, it also highlights a potential inability to secure external financing or generate sufficient operating cash flow.

• No Audit and Limited Financial History: Being a recently incorporated entity with accounts prepared under the small companies regime and no audit, there is limited historic financial data to assess trends. The company’s going concern assumption is based on directors’ willingness to support financially, which is positive but places responsibility on owners.

Overall, the company’s financial health resembles a patient with low blood pressure and weak circulation: the resources are insufficient to meet immediate demands, and the company relies on "transfusions" from directors to stay afloat.

---

4. Recommendations: Strategic Actions for Financial Wellness

To improve the company's financial health and restore a "healthy pulse," the following actions are advised:

1. Improve Liquidity and Cash Flow Management

   • Increase cash reserves through either capital injection or improved operational cash inflows.
   • Accelerate collection of receivables, including from connected companies, to boost cash.
   • Manage payables strategically to avoid liquidity strain while maintaining supplier relationships.

2. Reduce Reliance on Directors’ Loans

   • Develop a plan to repay or convert directors’ loans into equity to strengthen the balance sheet.
   • Explore alternative financing options such as bank loans or external investors to diversify funding sources.

3. Assess and Optimize Asset Utilization

   • Review the stock valuation (£102,350) to ensure it is realizable and not overstated.
   • Consider selling non-essential assets or investment properties to improve net asset position.

4. Enhance Business Performance

   • Focus on generating positive operating cash flow through effective property letting strategies.
   • Monitor operating expenses carefully to prevent cash drain.

5. Regular Financial Monitoring

   • Establish monthly financial reviews to detect early warning signs and take corrective actions promptly.
   • Prepare for future audit or enhanced financial reporting as the company grows for transparency and credibility.

6. Governance and Compliance

   • Maintain up-to-date filings and compliance with Companies House requirements to avoid penalties.
   • Engage professional advice periodically to ensure sound financial management.

---