Company Number: 14836889

Analysis Date: 2025-07-29 15:06 UTC

Financial Health Assessment Report for UK DUVAL LTD

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1. Financial Health Score: D (Needs Attention)

Explanation:
UK DUVAL LTD shows early-stage financial distress with a net negative equity position in its latest year, despite modest asset holdings. The presence of overdue liabilities and a sharp increase in current liabilities without proportional current assets signals liquidity pressures. While the company is still operational, this "symptom of distress" suggests urgent financial management and operational adjustments are needed to avoid further deterioration.

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2. Key Vital Signs

Metric	2023-05-31	2024-05-31	2025-05-31	Interpretation
Fixed Assets	£6,700	£6,700	£6,000	Stable but small asset base typical for micro entity
Current Assets	£0	Not shown	£2,500	Slight improvement but still low
Current Liabilities	£6,230	£6,230	£10,000	Increasing liability burden; liquidity risk
Net Current Assets (Working Capital)	Negative (-£6,230)	Negative (-£6,230)	Positive (£2,500)	Fluctuations suggest inconsistent liquidity management
Creditors Due After One Year	£0	£0	£10,000	Long-term liabilities introduced; possible financing for operations
Net Assets (Shareholders Funds)	£570	£570	-£1,400	Shift to negative equity indicates financial strain
Employees (Average)	2	Not shown	3	Small workforce consistent with micro-company status

• Liquidity: The company had a negative net current asset position in the first two years, indicating potential difficulties meeting short-term obligations. Although 2025 shows a positive net current asset figure (£2,500), this is offset by a significant long-term creditor balance of £10,000, leading to an overall negative net asset position.

• Solvency: The transition from positive to negative net assets (shareholders’ funds) is a critical symptom. Negative equity means liabilities exceed assets, a warning sign of possible insolvency risk if not addressed.

• Growth and Operations: The increase in average employees suggests some operational scaling, but the financial base has not strengthened proportionally.

• Accounting Notes: The accounts were prepared under micro-entity provisions, limiting disclosure detail. The director has not opted for an audit, which is typical for micro companies but limits external assurance.

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3. Diagnosis: Financial Condition of UK DUVAL LTD

UK DUVAL LTD is in the formative stage (incorporated 2023) and operates in the take-away food sector, a competitive and cash-sensitive industry. The company exhibits signs of financial instability:

• Liquidity Stress: Initially negative working capital indicates difficulty covering short-term debts. The slight improvement in current assets by 2025 is overshadowed by increased long-term liabilities.

• Capital Deficiency: The movement into negative net assets signals that the company’s total debts exceed its assets, often termed "balance sheet insolvency." This is a serious symptom indicating the business is currently undercapitalised.

• Reliance on Creditors: Introduction of £10,000 creditors due after one year suggests reliance on external financing, possibly loans or trade credit, to support operations. This raises concerns about interest obligations and repayment capacity.

• Operational Scale: With only 3 employees, the company remains small but is expanding. Profitability data is not provided, so it's unclear whether operations generate positive cash flow or losses.

• Director and Control: The sole director and 100% owner, Mr. Mrhaf Alloush, has full control, which can be a strength for quick decision-making but also a risk if financial discipline is lacking.

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4. Recommendations

To restore robust financial health, UK DUVAL LTD should consider the following actions:

• Improve Liquidity Management:

  • Tighten credit control and accelerate receivables collection to boost current assets.
  • Negotiate extended payment terms with suppliers to reduce immediate cash outflows.
  • Maintain a minimal cash buffer to handle day-to-day expenses ("healthy cash flow").

• Address Capital Deficiency:

  • Inject additional equity capital to restore positive net assets and strengthen the balance sheet ("capital infusion as a financial vaccine").
  • Alternatively, restructure long-term liabilities to manageable levels or convert debt to equity if possible.

• Cost Control and Profitability:

  • Review operational costs and staffing levels in line with revenue generation.
  • Explore pricing strategies or product mix changes to improve margins.

• Financial Planning and Monitoring:

  • Implement regular cash flow forecasting and budgeting to detect financial symptoms early.
  • Consider engaging an external financial advisor or accountant for periodic health checks.

• Compliance and Transparency:

  • Continue timely filing of accounts and returns to avoid penalties and maintain business credibility.
  • Although audit exemption is valid, consider voluntary external review to enhance stakeholder confidence.

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