WEDMORE REALITY LTD

Executive Summary

Wedmore Reality Ltd shows early signs of financial strain with negative net assets and a significant working capital deficit, reflecting liquidity and solvency challenges typical of a company in its start-up phase within real estate operations. Immediate actions to improve cash flow, secure additional capital, and manage liabilities are essential to prevent deeper financial distress and secure the company’s future viability.

WEDMORE REALITY LTD - Analysis Report

Company Number: 14597159

Analysis Date: 2025-07-20 17:16 UTC

Financial Health Assessment of Wedmore Reality Ltd as of 31 January 2024

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1. Financial Health Score: D

Explanation:
Wedmore Reality Ltd currently exhibits significant financial stress, primarily evidenced by negative net assets and a large working capital deficit. This score reflects a company facing liquidity challenges and balance sheet weakness, though it is not yet insolvent or in formal distress proceedings. Immediate financial management attention is required.

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2. Key Vital Signs

Metric	Amount (£)	Interpretation
Fixed Assets	1,651,721	Strong asset base—likely property holdings.
Current Assets	190,503	Limited short-term liquid assets (cash, receivables).
Current Liabilities	1,988,638	High short-term obligations due within one year.
Net Current Assets (Working Capital)	-1,798,135	Negative; indicates inability to cover short-term debts with current assets.
Total Assets less Current Liabilities	-146,414	Overall assets insufficient to cover current liabilities.
Net Assets (Shareholders’ Funds)	-147,434	Negative equity; company is technically insolvent on a balance sheet basis.

• Liquidity (Working Capital): The company’s current liabilities exceed current assets by £1.8 million, a "symptom of distress" pointing to potential cash flow difficulties.
• Solvency (Net Assets): Negative shareholders’ funds indicate cumulative losses or financial strain, undermining financial stability.
• Asset Composition: A high fixed asset base suggests ownership or leasehold of real estate, consistent with SIC codes for property letting and trading.

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3. Diagnosis

Wedmore Reality Ltd is in an early but concerning stage of financial distress. The "vital signs" reveal a business with a strong fixed asset base, likely property assets, but insufficient liquid assets to meet short-term liabilities. This imbalance results in negative working capital and negative equity, which are classic "symptoms" indicating liquidity constraints and potential solvency issues. Given the company’s incorporation in 2023 and its micro-entity status, it is likely still in a growth or setup phase; however, the large current liabilities suggest either financing obligations or supplier debts that may not be adequately covered by current assets or operating cash flow.

No employees were recorded during the period, indicating a minimal operational footprint or reliance on contractors. The company has not been audited but has complied with micro-entity reporting standards, which limits the depth of financial disclosure.

Overall, the company's financial health is fragile. Without intervention, the negative working capital and net liabilities could lead to cash flow crises or inability to meet obligations when due.

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4. Recommendations

• Improve Liquidity Management:
  Focus on converting fixed assets to cash or refinancing short-term liabilities into longer-term debt to reduce immediate cash outflows. Consider negotiating extended payment terms with creditors.

• Capital Injection:
  The negative net assets suggest the need for new equity investment or shareholder loans to restore positive net worth and strengthen the balance sheet.

• Cash Flow Forecasting:
  Implement rigorous cash flow forecasting to monitor upcoming payments and receipts, avoiding surprises and enabling proactive liquidity planning.

• Cost Control:
  Maintain lean operations with minimal overhead until financial stability improves. Avoid incurring additional short-term liabilities that exacerbate cash flow problems.

• Review Business Model and Strategy:
  Assess the profitability and revenue generation of property activities. Explore opportunities to increase income streams or divest non-core assets if necessary.

• Engage Professional Advice:
  Given the early signs of financial pressure, consulting insolvency or restructuring professionals may help devise a turnaround plan before distress worsens.

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