TURNQUAY DEVELOPMENTS LTD

Executive Summary

Turnquay Developments Ltd has a strong asset base anchored in investment properties but faces liquidity challenges due to a significant working capital deficit and high short-term liabilities. While the company is solvent, it must improve cash flow management and restructure liabilities to ensure sustainable financial health. With targeted actions to enhance liquidity and optimize debt structure, the company can strengthen its financial stability and support ongoing growth.

TURNQUAY DEVELOPMENTS LTD - Analysis Report

Company Number: 13156906

Analysis Date: 2025-07-29 21:01 UTC

Financial Health Assessment of TURNQUAY DEVELOPMENTS LTD

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1. Financial Health Score: C+

Explanation:
Turnquay Developments Ltd exhibits a moderate financial condition. The company holds substantial fixed assets primarily in investment properties, indicating a strong asset base. However, the company faces significant liquidity stress reflected by a large negative net current asset position (working capital deficit). The gearing level is elevated due to high current liabilities, mostly bank loans and other creditors, which could impact short-term financial flexibility. The positive net assets and shareholders’ funds indicate solvency, but the strain on working capital and reliance on external financing warrant caution.

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2. Key Vital Signs

Metric	Latest Value (2024-09-30)	Interpretation
Fixed Assets	£1,429,561	Strong asset base from investment properties, reflecting long-term investment value.
Current Assets	£96,795	Limited short-term assets, mostly cash and debtors.
Cash at Bank	£43,555	Cash position is low relative to current liabilities, potentially causing liquidity issues.
Current Liabilities	£794,823	High short-term obligations exceeding current assets by a wide margin, indicating working capital deficiency.
Net Current Assets	-£698,028	Negative working capital - a symptom of financial distress in meeting short-term obligations.
Long-term Liabilities	£158,981	Bank loans due after one year, adding to financial leverage.
Net Assets / Equity	£449,159	Positive net worth, indicating solvency and that assets exceed liabilities overall.
Share Capital	£100	Nominal share capital, typical for a private limited company.
Profit and Loss Reserve	£449,059	Accumulated retained earnings, showing some profitability or retained value over time.

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3. Diagnosis: Financial Condition Overview

• Liquidity ("Cash Flow Health"): The company suffers from poor liquidity, as evidenced by a large working capital deficit of approximately £698k. This means the company currently has insufficient short-term assets to cover its immediate debts. This is akin to a patient with a strong heart (solid asset base) but low blood pressure (cash flow), risking fainting spells (inability to pay bills on time).

• Solvency ("Balance Sheet Strength"): Despite liquidity issues, the company maintains a solid solvency position with net assets of £449k, supported by high-value investment properties. This suggests that the business has a strong foundation but is currently over-leveraged, particularly in the short term.

• Leverage ("Financial Stress"): The heavy current liabilities mainly consisting of bank loans and other creditors indicate reliance on short-term finance. This creates financial strain and risk, especially if cash inflows are disrupted.

• Profitability: While profit and loss reserves are positive, detailed profit figures are not disclosed due to exemption. However, the increase in fixed assets and net assets over time implies some level of operational success or asset appreciation.

• Growth and Stability: The company has grown its fixed assets from £462k in early 2021 to over £1.4M in 2024, showing expansion. However, the worsening working capital suggests growth may be outpacing cash management, a symptom of overextension.

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4. Recommendations for Financial Wellness Improvement

• Improve Liquidity Management:

  • Strengthen cash reserves through better collection of debtors and optimizing payment terms with creditors. Consider negotiating extended payment terms to ease short-term cash demands.
  • Explore short-term financing options or overdraft facilities as a buffer but avoid excessive reliance that increases financial risk.

• Restructure Current Liabilities:

  • Convert some current liabilities into longer-term debt where possible to reduce immediate repayment pressure.
  • Review and prioritize creditor payments to avoid penalties or triggering insolvency risks.

• Enhance Cash Flow Forecasting:

  • Implement regular cash flow forecasting to identify timing mismatches and plan for shortfalls proactively.
  • Monitor project completions and revenue recognition closely, as the business operates in building completion and finishing, which can have project-driven cash flow cycles.

• Asset Utilization and Divestment:

  • Consider if any fixed assets or investments can be monetized or leveraged to improve cash position without compromising business operations.
  • Review investment property valuations regularly and explore opportunities for rental income or sale if necessary.

• Governance and Reporting:

  • Ensure the director maintains transparent financial reporting and considers obtaining audits or external reviews if financial complexity increases.
  • Maintain compliance with filing deadlines to avoid penalties and maintain stakeholder confidence.

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