SIDDHEXA HOMES LTD

Executive Summary

SIDDHEXA HOMES LTD shows early signs of financial distress, primarily due to high current liabilities exceeding its current assets and resulting in negative equity. While investment in property assets is healthy, the company faces liquidity challenges that could threaten its short-term survival unless immediate action is taken to improve cash flow and manage debts. Proactive financial management and potential capital injection are recommended to stabilize and strengthen its financial health.

SIDDHEXA HOMES LTD - Analysis Report

Company Number: 14600536

Analysis Date: 2025-07-29 12:35 UTC

Financial Health Assessment for SIDDHEXA HOMES LTD (As of 31 January 2024)

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1. Financial Health Score: D

Explanation:
The company shows significant symptoms of financial distress, primarily due to a negative net asset position and a large current liability burden far exceeding current assets. While the fixed assets indicate investment in real estate, the company’s current liabilities outweigh current assets by a wide margin, resulting in a negative working capital and net assets of -£1,000. This suggests liquidity stress and potential solvency concerns at this early stage of business life.

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2. Key Vital Signs

Metric	Value (£)	Interpretation
Fixed Assets	116,900	Investment in real estate assets, reflecting core business activity of buying and selling property. Healthy for asset base.
Current Assets	1,574	Very low liquid assets (cash, receivables), indicating limited immediate resources.
Current Liabilities	119,474	Very high short-term obligations, likely loans or payables. Risk of liquidity crunch.
Net Current Assets (Working Capital)	-117,900	Negative working capital indicating inability to cover short-term debts with current assets.
Total Assets Less Current Liabilities	-1,000	Negative indicates liabilities exceed assets when short-term debts are considered.
Net Assets (Equity)	-1,000	Negative shareholder equity, a sign of financial distress or early-stage financing structure.
Shareholders Funds	-1,000	Reflects accumulated losses or funding shortfall.

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3. Diagnosis: Financial Condition

• Symptoms of Distress:
  The company is exhibiting a classic symptom of financial strain—negative net assets and working capital deficit. This "red flag" suggests the company may be relying heavily on short-term borrowing or trade credit to finance operations, possibly due to insufficient cash inflows.

• Asset Base vs. Liability Load:
  Fixed assets of £116,900 show investment in property, consistent with its SIC classification (buying and selling own real estate). However, the current liabilities of £119,474 dwarf the current assets and fixed assets when liabilities are considered, signaling potential liquidity risk.

• Going Concern and Cash Flow:
  The directors’ note about "good levels of sales growth and profitability" and confidence in going concern is optimistic but not fully supported by the balance sheet figures. The very low current assets indicate a fragile cash flow position, and the company may face challenges meeting short-term obligations if cash inflows do not improve.

• Early Stage Consideration:
  Incorporated in January 2023 with the first accounts made up to January 2024, it is common for startups to have negative equity initially due to startup costs, asset acquisition, and initial borrowings. However, the company must monitor liquidity carefully to avoid distress.

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4. Recommendations

• Improve Liquidity:
  The company should focus on increasing current assets, particularly cash or receivables. This can be done by accelerating sales collections, negotiating better credit terms with suppliers, or injecting additional working capital.

• Manage Short-Term Debts:
  Renegotiate payment terms on current liabilities to extend payment periods, reducing immediate cash outflows and easing liquidity pressure.

• Monitor Asset Utilization:
  Ensure that the fixed assets (real estate) are generating returns (through sales or rental income) to improve profitability and cash flow.

• Financial Planning and Forecasting:
  Prepare detailed cash flow forecasts to anticipate liquidity needs and avoid surprises. Consider contingency plans for financing if cash flow tightens.

• Consider Additional Capital Injection:
  Given negative equity, raising fresh equity capital or converting some liabilities to equity can strengthen the balance sheet and provide operational breathing space.

• Regular Financial Review:
  Implement monthly financial health checks to monitor vital signs such as liquidity ratios and net assets, allowing early detection of worsening conditions.

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Medical Analogy Summary

The company’s financial "pulse" is weak, with a dangerously low "blood pressure" of liquidity and a "heart" weighed down by heavy short-term liabilities. While the "lungs" (fixed assets) appear healthy, the company risks a "circulatory failure" if cash flow doesn't improve soon. Early intervention through liquidity management and capital support is crucial to prevent worsening "financial illness."

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