LM&AP LTD

Executive Summary

LM&AP LTD, a micro-entity in motor vehicle maintenance, shows early symptoms of financial strain primarily due to negative working capital and reduced shareholders’ funds. While currently stable, the company must urgently address liquidity challenges through improved cash flow management and operational efficiency. Proactive steps can restore financial health and support sustainable growth.

LM&AP LTD - Analysis Report

Company Number: 14718512

Analysis Date: 2025-07-29 19:11 UTC

Financial Health Assessment for LM&AP LTD as of 31 March 2025

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1. Financial Health Score: C

Explanation:
LM&AP LTD shows mixed signals in its financial condition. The company has a relatively small asset base consistent with its micro-entity status, but recent deterioration in liquidity and working capital raises caution flags. While shareholders' funds remain positive, the increase in current liabilities relative to current assets indicates emerging strain on operational cash flow. Overall, the company is stable but exhibits symptoms that warrant close monitoring and remedial action.

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2. Key Vital Signs

Metric	2025 Figure (£)	Interpretation
Fixed Assets	27,130	Increased investment in long-term assets, which may support future operations.
Current Assets	16,844	Declined sharply from previous year, indicating reduced short-term liquidity.
Current Liabilities	26,234	Increased by ~56% year-on-year, now surpassing current assets—sign of short-term financial stress.
Net Current Assets (Working Capital)	(9,390)	Negative working capital signals potential difficulty in meeting short-term obligations.
Shareholders’ Funds	17,740	Decreased significantly from £30,904 last year, suggesting losses or capital withdrawals.
Cash (2024 data)	25,869	Cash reserves were healthy a year ago but likely diminished given current asset drop.
Average Employees	0	No staff employed, indicating very lean operations or possibly dormant activity.

Interpretation of Vital Signs:

• The negative working capital is the most concerning symptom, akin to a patient showing signs of dehydration—immediate attention is needed to restore balance.
• The drop in shareholders' equity could indicate accumulated losses or distributions to owners, reducing the financial buffer.
• The rise in fixed assets suggests some investment, but without strong liquidity, this could strain finances further.

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3. Diagnosis

LM&AP LTD is currently exhibiting signs of financial distress primarily due to its liquidity position. The company’s ability to cover short-term debts with current assets is impaired, which can be symptomatic of operational cash flow issues or delayed receivables collection. The shrinking shareholders' funds reduce the cushion available to absorb shocks, making the company vulnerable to unexpected expenses or downturns.

The absence of employees and the nature of the business (auto locksmith maintenance and repair) suggest a small-scale operation, possibly reliant on owner-directors. This lean structure can limit overheads but also restrict growth and scalability.

While the company is not insolvent, the symptoms of financial strain need proactive management to avoid progression to more severe distress such as liquidity crises or inability to meet creditor demands.

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4. Recommendations

• Improve Cash Flow Management:
  Conduct a detailed review of receivables and payables cycles. Accelerate collection of debts and negotiate longer payment terms with suppliers where possible to improve liquidity.

• Working Capital Optimization:
  Consider ways to reduce current liabilities or convert short-term debt into longer-term financing to reduce pressure on immediate cash flow.

• Financial Monitoring:
  Establish monthly cash flow forecasts and key performance indicator tracking to detect early warning signs of financial stress.

• Operational Efficiency:
  Evaluate operational costs and asset utilization to ensure investments in fixed assets yield returns. Given the small scale, optimize resource deployment to maintain profitability.

• Capital Injection:
  If feasible, consider capital infusion from shareholders or external sources to strengthen the equity base and provide liquidity buffer.

• Strategic Planning:
  Develop a clear business plan detailing how the company will grow its revenue base and improve profitability to restore financial health.

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