LTRO PERRYMOUNT LTD
Executive Summary
LTRO Perrymount Ltd exhibits early-stage financial distress characterized by negative net assets and a severe working capital deficit, indicating liquidity challenges. Immediate measures to improve cash flow and manage liabilities are critical to stabilize the company's financial health and avoid insolvency risks. With prompt intervention, the business can work towards establishing a healthier financial footing.
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This analysis is opinion only and should not be interpreted as financial advice.
LTRO PERRYMOUNT LTD - Analysis Report
Financial Health Assessment for LTRO Perrymount Ltd (as of 30 June 2024)
1. Financial Health Score: D (At Risk)
Explanation:
The company shows concerning financial signals, including negative net assets and a significant working capital deficit. While it is early in its lifecycle (incorporated June 2023), the balance sheet reveals symptoms of financial distress that require immediate attention to avoid worsening.
2. Key Vital Signs
Metric | Value (£) | Interpretation |
---|---|---|
Fixed Assets | 1,450,059 | Strong investment in long-term assets; likely property holdings. |
Current Assets | 75 | Extremely low liquid assets—"healthy cash flow" is absent. |
Current Liabilities | 1,427,606 | Very high short-term debts due within one year; potential liquidity crunch. |
Net Current Assets | -1,427,531 | Severe working capital deficit—indicates inability to meet short-term obligations. |
Total Assets Less Current Liabilities | 22,528 | Slightly positive after deducting current liabilities but overshadowed by accruals. |
Accruals and Deferred Income | 96,464 | Outstanding obligations further eroding financial health. |
Net Assets (Shareholders' Funds) | -73,936 | Negative equity—shareholders’ funds are in deficit, an alarming symptom. |
Additional Notes:
- The company is categorized as a Micro entity, limiting the depth of reported data.
- The business primarily deals in buying and selling its own real estate (SIC 68100).
- Average number of employees: 3, indicating a small operational scale.
3. Diagnosis
Symptoms Analysis:
- The company’s balance sheet reveals a crucial symptom of distress: negative net assets (-£73,936) combined with a very high current liabilities figure relative to current assets (only £75). This implies LTRO Perrymount Ltd cannot cover its short-term debts with its short-term assets, a classic sign of liquidity issues akin to a patient with insufficient blood flow to vital organs.
- The large fixed asset base (£1.45 million) suggests capital-intensive operations in property, but these assets are not easily converted into cash, worsening liquidity.
- High accruals (£96,464) indicate ongoing financial obligations that are not yet paid, adding to the strain.
- Negative working capital (-£1.43 million) signals operational cash flow problems, potentially leading to insolvency if unaddressed.
- The micro-entity exemption from audit limits external scrutiny, which could mask underlying risks.
- Directors are newly appointed and the company is young (just over one year old), so it may still be in the investment/start-up phase, but the financial "vitals" suggest it has not yet stabilized.
Overall Health Condition:
The company is financially fragile—its "heart" (working capital) is weak, and it is running a "deficit" in shareholder equity. Without intervention, the risk of financial collapse or insolvency procedures increases.
4. Recommendations
Immediate Actions:
- Improve Liquidity: Seek additional short-term financing or inject capital to shore up current assets and reduce the liquidity gap. This might include shareholder loans or credit lines.
- Review and Manage Current Liabilities: Negotiate extended payment terms with creditors to alleviate immediate cash flow pressure.
- Asset Utilization: Evaluate fixed assets for potential sale or refinancing to generate cash. Given the nature of the business (real estate), consider monetizing non-core properties.
- Cost Control: Monitor and reduce operational expenses and accruals to conserve cash.
- Financial Monitoring: Implement robust cash flow forecasting and regular financial reviews to detect early "symptoms" of distress.
- Engage Professional Advice: Consult with insolvency practitioners or financial advisors to explore restructuring options before conditions worsen.
Long-term Strategies:
- Build a healthy cash reserve to ensure operational resilience.
- Strengthen equity base through capital injections or retained earnings growth.
- Develop a sustainable business model focusing on positive cash flow generation.
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