OLD FRIENDS DAY CARE LTD

Executive Summary

OLD FRIENDS DAY CARE LTD, a newly formed company, shows positive short-term liquidity but suffers from negative net assets due to reliance on director loans. The company is in early development with no employees and needs to generate operational revenue and strengthen its equity base. Strategic focus on funding, cost control, and operational ramp-up is crucial for financial recovery and future stability.

OLD FRIENDS DAY CARE LTD - Analysis Report

Company Number: NI700763

Analysis Date: 2025-07-29 20:59 UTC

Financial Health Assessment for OLD FRIENDS DAY CARE LTD (NI700763)

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1. Financial Health Score: D

Explanation:
Given the company is newly incorporated (August 2023) with its first annual accounts filed for the period ending August 2024, the financial indicators show early-stage challenges. The company is operating with negative net assets (a form of balance sheet insolvency), and the current financial structure relies heavily on director loans. While the company maintains positive net current assets, its overall financial position indicates signs of distress typical for a start-up in a capital-intensive or service-intensive sector such as residential care.

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2. Key Vital Signs

Metric	Value	Interpretation
Cash at bank	£16,381	Healthy cash balance providing short-term liquidity.
Current Liabilities	£540	Very low short-term liabilities indicating manageable immediate obligations.
Net Current Assets (Working Capital)	£15,841	Positive working capital suggests the company can cover short-term debts comfortably.
Loans from Directors (Long-term Liabilities)	£19,910	Significant long-term debt owed to directors, indicating reliance on internal financing.
Net Assets	-£4,069	Negative net assets show the company’s liabilities exceed its assets, a symptom of financial stress.
Shareholders’ Funds (Equity)	-£4,169	Negative equity reflects accumulated losses or initial undercapitalization.
Number of Employees	0	No staff employed yet, which may reflect operational status or early development stage.

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3. Diagnosis

The financial "vital signs" indicate that OLD FRIENDS DAY CARE LTD is in the early phases of its business lifecycle. The company has a reasonably healthy short-term liquidity position, as shown by positive cash and net current assets, which is encouraging and akin to a patient with a steady heartbeat.

However, the negative net assets and equity suggest the company is "underweight" financially — it has liabilities exceeding its assets primarily due to director loans amounting to nearly £20,000. These loans function like a lifeline or intravenous support, injecting necessary funds to keep the company operational while external financing or profitability is not yet established.

The absence of employees may suggest the company is not yet fully operational or is in a preparatory phase. This lack of operational activity may be limiting revenue generation and contributing to the negative equity.

Overall, the company exhibits early "symptoms of financial distress," typical of start-ups that have yet to achieve scale or profitability. The reliance on director loans is a red flag for long-term sustainability unless these funds are replaced with operational cash flow or external investment.

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4. Recommendations

To improve financial health and move from a "symptomatic" state to a "healthy" financial condition, the company should consider the following:

• Increase Revenue Generation: Begin or ramp up operations to generate income. This is critical to transition from funding reliance to self-sustaining cash flow.
• Manage Director Loans: Develop a plan to either convert director loans into equity or repay them through generated profits to strengthen the equity base.
• Cost Control: Since no employees are currently on payroll, carefully plan staffing needs and control costs when scaling up to avoid cash flow strain.
• Seek External Funding: Explore grants, loans, or equity investment to improve capital structure and reduce dependence on director loans.
• Regular Financial Monitoring: Implement monthly cash flow forecasting and management reporting to catch early signs of distress and act proactively.
• Compliance and Governance: Maintain timely filings and ensure directors understand their fiduciary duties, especially given the company's fragile capital position.

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