OLD CHURCH COURT LTD
Executive Summary
OLD CHURCH COURT LTD is a newly established private company showing early financial distress symptoms, including negative net assets and working capital deficits. While startup losses are not unusual, the company must urgently strengthen its capital base and improve cash flow management to avert liquidity crises. Proactive financial planning and funding are critical to restoring its financial health and ensuring sustainable growth in the property management and development sector.
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This analysis is opinion only and should not be interpreted as financial advice.
OLD CHURCH COURT LTD - Analysis Report
Financial Health Assessment Report: OLD CHURCH COURT LTD
1. Financial Health Score: Grade D
Explanation:
The company exhibits signs of financial distress with negative net assets and shareholders' funds, indicating more liabilities than assets at the balance sheet date. The absence of significant current assets and a negative working capital position ("net current assets" of -£250) are symptoms of liquidity strain. Given the company’s early stage (incorporated late 2022) and small scale, this may partly reflect startup phase challenges but still warrants caution. The financial "vitals" suggest a fragile condition needing prompt attention.
2. Key Vital Signs (Core Financial Metrics)
Metric | Value | Interpretation |
---|---|---|
Net Current Assets (Working Capital) | -£250 | Negative working capital suggests difficulty meeting short-term liabilities; signs of cash flow stress. |
Net Assets (Total Equity) | -£250 | Negative net assets indicate liabilities exceed assets; a key symptom of financial distress. |
Share Capital | £25 | Very small equity base; limited capital buffer for operations or shocks. |
Profit & Loss Reserve | -£275 | Accumulated losses exceeding share capital; indicates the company has yet to generate profits. |
Average Number of Employees | 1 | Very small operational scale, typical for micro company but limits revenue potential. |
Account Category | Unaudited Abridged | Limited external scrutiny; increases risk of overlooked financial issues. |
Industry | Property management and development | Capital-intensive sector; requires careful cash management and financing. |
3. Diagnosis: Financial Condition
OLD CHURCH COURT LTD is in the early startup phase, with limited financial history (less than two years). The company's negative net assets and working capital indicate an "ailing" financial state, akin to a patient showing early symptoms of distress. The negative retained earnings (P&L reserve) reflect accumulated losses that exceed the initial capital injection, a common startup symptom but one that reduces the company's financial resilience.
The small scale (one employee) and unaudited accounts limit the breadth of financial data, making comprehensive risk assessment difficult. However, the strain in liquidity and equity suggests the company is operating with very tight financial margins and may struggle to fund ongoing operations or growth without additional capital or improved profitability.
The directors' statement about adopting the going concern basis reflects optimism but should be viewed cautiously due to the current negative equity position and working capital deficit.
4. Recommendations: Actions to Improve Financial Wellness
Strengthen Capital Base:
Consider raising additional equity or obtaining long-term financing to improve net assets and provide a financial cushion. This is similar to administering a strengthening tonic to a weakened patient.Improve Cash Flow Management:
Tighten control over receivables, payables, and expenses to improve working capital. Explore quicker cash conversion cycles and negotiate better payment terms with suppliers and customers.Focus on Profitability:
Develop a clear revenue growth plan and cost control measures to move from accumulated losses to positive retained earnings. This is essential for restoring financial "vitality."Regular Financial Monitoring:
Implement monthly financial reviews to detect and address symptoms of distress early, akin to regular health check-ups.Consider Professional Advice:
Engage financial advisors or accountants for detailed cash flow forecasting and strategic planning to support sustainable growth in a capital-intensive property sector.Maintain Compliance and Transparency:
Although unaudited, consider voluntarily obtaining professional reviews for credibility and stakeholder confidence.
Executive Summary
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