SNR AUTOS & TYRES LTD

Executive Summary

SNR AUTOS & TYRES LTD is currently in a fragile financial state characterized by negative equity and heavy reliance on director loans, posing risks to its ongoing viability. While the company shows some operational assets and positive working capital, immediate actions are needed to improve liquidity, reduce debt dependence, and strengthen profitability to avoid insolvency risks. With targeted interventions and careful financial management, the company can potentially stabilize and improve its financial health.

SNR AUTOS & TYRES LTD - Analysis Report

Company Number: 14937653

Analysis Date: 2025-07-29 16:44 UTC

Financial Health Assessment for SNR AUTOS & TYRES LTD

Assessment Date: 30 June 2024 (Financial Year End)

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1. Financial Health Score: D (At Risk)

Explanation:
The company exhibits several signs of financial distress, primarily due to negative net assets and high director loans compared to its current asset base. While there is some positive working capital, the overall financial structure is weak, signaling vulnerability. Immediate attention is needed to improve solvency and reduce reliance on director funding.

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2. Key Vital Signs

Metric	Value (£)	Analysis
Current Assets	31,090	Adequate short-term assets including cash, debtors, and inventory.
Cash at Bank	2,337	Very low cash reserves indicating tight liquidity.
Debtors	9,042	Moderate receivables; collection efficiency should be monitored.
Current Liabilities	29,412	Short-term debts slightly less than current assets, providing a small working capital buffer.
Net Current Assets (Working Capital)	1,678	Positive but minimal, indicating limited liquidity cushion.
Fixed Assets (Tangible)	61,377	Significant investment in plant, machinery, and equipment.
Long-Term Liabilities	70,000	Substantial loans from directors classified as long-term debt.
Net Assets	-6,945	Negative net worth indicating liabilities exceed total assets.
Shareholders' Funds	-7,045	Negative equity signals financial distress and potential insolvency risk.
Director Loans	83,084	High reliance on unsecured, interest-free director loans to finance operations.

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3. Symptoms Analysis

• Negative Net Assets ("Financial Anemia"): The company’s balance sheet shows a deficit, with liabilities surpassing assets by nearly £7,000. This condition is akin to a patient losing more blood than it can replenish — a critical warning of financial instability.

• High Director Debt ("Dependence on Lifeline"): The company owes over £83,000 to the director, which is unsecured and interest-free. This suggests the business is relying heavily on internal funding to sustain operations—a risky practice if the director cannot continue support.

• Low Cash Reserves ("Dehydration"): Cash on hand is only £2,337, which is insufficient to cover short-term obligations comfortably. This tight liquidity could lead to difficulty meeting immediate expenses, much like a dehydrated patient struggling to maintain vital functions.

• Modest Working Capital ("Fragile Pulse"): Positive net current assets indicate some operational liquidity, but the narrow margin suggests limited buffer to absorb shocks such as delayed payments or unexpected costs.

• Asset Investment ("Capital Muscle"): Tangible fixed assets of £61,377 show investment in equipment and infrastructure, which is positive for operational capacity, but these are illiquid in the short term.

• Recent Name Change and New Incorporation ("Fresh Patient"): The company was incorporated in June 2023 and changed its name from MAHNGA'S FASHION LTD in February 2024, indicating a recent business restart or pivot. Early years are typically riskier and require close monitoring.

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4. Diagnosis

SNR AUTOS & TYRES LTD is in a financially vulnerable state. The company’s negative equity ("financial anemia") and heavy reliance on director loans ("lifeline dependence") indicate it is not yet financially robust. Liquidity is constrained with low cash reserves and minimal working capital, posing risks to meeting short-term obligations without additional funding or improved cash flow. The tangible assets ("capital muscle") provide some operational foundation but cannot offset the immediate financial strain.

The business is in its infancy (just over 1 year old), which often explains some early-stage financial stress, but without strengthening capital structure and liquidity, the company risks insolvency if external or internal support wanes.

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5. Prognosis

If current financial trends continue without intervention, the company faces increasing risk of insolvency. However, with appropriate management actions—such as improving cash flow, reducing debt reliance, and increasing profitability—the company can stabilize and build a healthier financial profile over the next 1-2 years.

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6. Recommendations

• Improve Liquidity ("Hydrate the Cash Flow"):
  Focus on accelerating debtor collections and managing inventory efficiently to increase cash reserves. Consider negotiating extended payment terms with creditors to reduce immediate cash outflows.

• Restructure Director Loans ("Wean off Lifeline"):
  Explore converting some director loans into equity or formalising repayment plans to improve balance sheet health and reduce reliance on unsecured debt.

• Increase Capital Injection ("Blood Transfusion"):
  If feasible, the director or new investors should inject additional equity capital to restore positive net assets and strengthen financial stability.

• Cost Control and Profitability ("Strengthen Vital Signs"):
  Monitor operational expenses closely and seek ways to improve margins, potentially through pricing adjustments or cost efficiencies in vehicle maintenance, repairs, and sales.

• Regular Financial Monitoring ("Health Check-ups"):
  Implement monthly management accounts and cash flow forecasts to detect financial stress early and respond proactively.

• Review Business Strategy ("Diagnose Underlying Causes"):
  Given the recent name and business focus change, ensure the market positioning and product/service mix are aligned with customer demand and profitability potential.

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