RELIABLE DOMESTIC PROPERTY LIMITED

Executive Summary

Reliable Domestic Property Limited shows improving short-term liquidity but is facing solvency challenges due to rising long-term liabilities and a dip into negative equity. Immediate attention to debt management and capital structure is essential to prevent financial distress. With focused actions on debt reduction and cash flow management, the company can stabilize and strengthen its financial foundation.

RELIABLE DOMESTIC PROPERTY LIMITED - Analysis Report

Company Number: 14356793

Analysis Date: 2025-07-20 15:18 UTC

Financial Health Assessment Report for RELIABLE DOMESTIC PROPERTY LIMITED
Date of Financial Year End: 30 September 2024

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1. Financial Health Score: D

Explanation:
The company shows signs of financial distress with net liabilities reflected in the latest accounts. While there is operational activity reflected by current assets growth, the presence of long-term creditors exceeding net assets and a negative shareholders’ funds position indicate weakened financial health. The business is still active but exhibits symptoms akin to "chronic financial stress" which requires attention.

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2. Key Vital Signs

Metric	2024 (£)	2023 (£)	Interpretation
Fixed Assets	434	603	Small fixed asset base typical for micro entity; slight reduction indicates low capital investment.
Current Assets	13,128	5,443	Healthy increase in liquid/current assets, a positive sign for short-term liquidity.
Current Liabilities	10,755	6,045	Significant rise, indicating increased short-term obligations; potential strain on cash flow.
Net Current Assets (Working Capital)	2,373	-602	Improved working capital, positive sign for operational liquidity.
Creditors > 1 year	3,016	0	Introduction of long-term creditors; potential red flag if not managed properly.
Net Assets (Shareholders’ Funds)	-209	1	Shift to negative equity, indicating the company’s liabilities now outweigh assets.
Director Loan Account	1,502	0	Interest-free loan from director, indicating reliance on related-party funding.
Employees	1	1	Stable workforce size, typical for micro business.

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3. Diagnosis: Financial Condition and Underlying Health

• Liquidity & Working Capital: The company’s current assets have more than doubled from 2023 to 2024, improving working capital into a positive figure (£2,373), suggesting the company currently has enough short-term assets to cover immediate liabilities. This is a "healthy pulse" indicating operational cash flow is sufficient in the short term.

• Solvency Concerns: Despite improved liquidity, the overall net assets have turned negative (£-209), primarily due to the addition of long-term creditors (£3,016) not present in the prior year. This places the company in a "symptom of distress" category where long-term obligations exceed the company’s asset base. Negative equity may affect borrowing capacity and stakeholder confidence.

• Funding & Capital Structure: The director has provided an interest-free loan (£1,502), reflecting internal funding support. While beneficial short term, continued reliance on director loans without a clear repayment plan can mask underlying cash flow issues.

• Business Scale and Activity: The company qualifies as a micro-entity, with minimal fixed assets and a single employee, consistent with a small-scale, service-based real estate management business. The SIC codes align with real estate agency and management activities, indicating typical asset-light operations.

• Governance & Compliance: The company is active, with timely filing of accounts and confirmation statements, showing administrative diligence. The director is also the company secretary, common in small businesses but worth monitoring for governance best practices.

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4. Recommendations: Actions to Improve Financial Wellness

1. Address Negative Equity:
   Develop a plan to reduce long-term liabilities or increase equity, such as additional capital injections or restructuring debt, to restore positive net assets and improve solvency.

2. Monitor and Manage Long-Term Creditors:
   Clarify the nature and terms of the £3,016 long-term creditors to ensure these obligations are sustainable and do not jeopardize future cash flow.

3. Reduce Reliance on Director Loans:
   Establish clear repayment schedules or consider formalizing loans to avoid potential conflicts or liquidity strain.

4. Cash Flow Forecasting:
   Implement detailed cash flow projections to anticipate liquidity needs, especially given the rise in current liabilities.

5. Explore Revenue Growth and Cost Control:
   Seek opportunities to increase revenues or optimize expenses to strengthen retained earnings and build reserves.

6. Governance Enhancements:
   Consider appointing an independent company secretary or financial advisor for improved oversight and financial management guidance.

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