RANDHAWA PROPERTY LTD

Executive Summary

Randhawa Property Ltd shows stable long-term assets but suffers from poor liquidity and negative net worth, signaling financial fragility. Immediate actions to improve cash flow, restructure debt, and strengthen equity are essential to avoid worsening distress. With prompt intervention, the company can stabilize its financial health and position itself for future growth.

RANDHAWA PROPERTY LTD - Analysis Report

Company Number: 14024366

Analysis Date: 2025-07-29 15:25 UTC

Financial Health Assessment: RANDHAWA PROPERTY LTD

---

1. Financial Health Score: D

Explanation:
The company exhibits clear symptoms of financial distress, primarily due to persistent net liabilities and negative net current assets over the last three reported years. The balance sheet shows a fragile capital structure with liabilities exceeding assets, indicating a weak financial position. While not yet insolvent, the company’s financial "vital signs" suggest caution.

---

2. Key Vital Signs

Metric	2024 (£)	Interpretation
Fixed Assets	220,102	Healthy long-term asset base, consistent over three years, indicating stable property holdings.
Current Assets	6,388	Very low liquid assets relative to short-term debts, indicating poor short-term liquidity ("poor pulse").
Current Liabilities	161,250	High short-term obligations, creating liquidity strain ("symptoms of stress").
Net Current Assets	-60,849	Negative working capital, meaning current liabilities exceed current assets, a liquidity warning.
Total Assets Less Current Liabilities	159,253	Positive but barely sufficient buffer before long-term debts are considered.
Long-Term Liabilities	161,250	Significant debt burden, nearly equal to long-term asset value ("heavy load on the heart").
Net Assets (Equity)	-1,997	Negative net worth indicates shareholders’ funds are eroded, a serious "diagnostic red flag."

---

3. Diagnosis

Randhawa Property Ltd operates in the real estate sector with a stable fixed asset base representing property holdings. However, the company is exhibiting chronic financial distress symptoms:

• Liquidity Problems: The company’s current assets (cash and receivables) are vastly insufficient to cover short-term liabilities, resulting in negative net working capital. This is akin to a patient with a weak pulse and poor fluid balance — the business may struggle to meet immediate obligations without refinancing or cash injections.

• Negative Equity: Persistent negative net assets indicate the company’s liabilities exceed its total assets, implying the owners’ investment is effectively underwater. This condition suggests that the company is "financially anemic" and may face difficulties attracting new investment or credit.

• Debt Burden: Long-term liabilities nearly match the value of fixed assets, indicating high leverage. While fixed assets provide collateral, the company's ability to service debt from operations or asset sales is unclear and potentially strained.

• Stagnant Financial Position: There has been minimal change in financial structure over the past three years, indicating no significant improvement or deterioration but no recovery either.

Overall, the company is in a fragile financial condition, with liquidity risks and over-leverage being major concerns. Without intervention, these symptoms could lead to worsening distress.

---

4. Recommendations

To improve financial wellness and stabilize the business, consider the following actions:

1. Improve Liquidity:

   • Seek to increase current assets by accelerating receivables collection or injecting working capital.
   • Negotiate with creditors to extend payment terms or restructure short-term liabilities.

2. Debt Management:

   • Explore refinancing options to reduce short-term debt pressure and spread repayments over a longer term.
   • Consider asset sales of non-core properties to reduce liabilities and improve net asset position.

3. Capital Injection:

   • Owners or new investors could inject equity to restore positive shareholders’ funds, improving the balance sheet "immune system."

4. Operational Review:

   • Evaluate rental income streams and operating costs to ensure sustainable cash flow to service debt obligations.
   • Increase focus on profitable property lettings and possibly divest underperforming assets.

5. Regular Monitoring:

   • Implement monthly cash flow forecasting and tight budget controls to detect early signs of distress and manage "financial vitals" proactively.

---