WESTSTAR ESTATES LIMITED

Executive Summary

WESTSTAR ESTATES LIMITED shows stable but fragile financial health with positive net assets but acute liquidity challenges due to a steep increase in short-term liabilities and depletion of current assets. Immediate focus on cash flow management and strengthening equity is essential to prevent financial distress. With prudent financial controls and strategic funding adjustments, the company can stabilize and support its growth in the real estate sector.

WESTSTAR ESTATES LIMITED - Analysis Report

Company Number: 13971158

Analysis Date: 2025-07-29 16:04 UTC

Financial Health Assessment Report: WESTSTAR ESTATES LIMITED

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1. Financial Health Score: C

Explanation:
The company shows moderate financial health with positive net assets and shareholders’ funds, but exhibits signs of liquidity strain as current liabilities exceed current assets significantly in the latest year. This suggests a "symptom of distress" in short-term cash flow management. While not critical, this requires close attention to prevent worsening conditions.

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2. Key Vital Signs

Metric	2024 Value	Interpretation
Fixed Assets	£30,000	Investment in long-term assets increased, indicating expansion or capital expenditure.
Current Assets	£0	No liquid assets available, signaling cash or receivables have depleted — a red flag.
Current Liabilities	£27,105	High short-term obligations due within a year, significantly greater than current assets.
Net Current Assets	-£27,105	Negative working capital; company may struggle to cover short-term debts ("unhealthy cash flow").
Total Net Assets	£2,395	Positive equity base but marginal, showing limited buffer after liabilities.
Shareholders’ Funds	£2,395	Equity slightly increased but remains low relative to liabilities.
Employee Count	2	Small workforce consistent with Micro-entity status; manageable overheads.

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3. Diagnosis

• Liquidity Strain: The critical symptom is the sharp drop in current assets from £4,345 in 2023 to zero in 2024, while current liabilities surged to £27,105. This indicates the business is currently unable to meet short-term obligations from easily convertible assets, which is akin to a "heart rhythm irregularity" in financial terms — a warning sign requiring immediate attention.

• Asset Growth: The acquisition or recognition of £30,000 in fixed assets suggests the company invested in property or equipment, consistent with its real estate operations. This could be a strategic move but may have strained liquidity if funded through short-term debt.

• Equity and Capital: Shareholders’ funds increased modestly from £1,845 to £2,395, indicating some retained earnings or additional capital injections, but overall equity remains thin. This limited "financial immune system" reduces resilience to shocks.

• Operational Scale: The company operates at a micro-entity scale with just 2 employees, implying low operational complexity but also limited scale to generate significant cash flow.

• Industry Context: Operating in the real estate letting sector, cash flow timing mismatches are common due to rental cycles and property maintenance costs. However, the current imbalance suggests a liquidity "infection" that could impair ongoing operations if not treated.

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4. Recommendations

• Improve Liquidity Management:

  • Secure short-term financing or credit lines to cover immediate liabilities and avoid default risks.
  • Accelerate collection of any outstanding receivables or review payment terms with suppliers to ease cash flow pressure.

• Review Capital Structure:

  • Consider additional equity injections to strengthen the financial "immune system," providing a cushion against future downturns.
  • Evaluate long-term funding options to refinance short-term liabilities, creating a healthier maturity profile.

• Asset Utilization Assessment:

  • Ensure the fixed assets acquired are generating expected returns or rental income promptly to support cash inflows.
  • Explore opportunities to liquidate non-essential assets if cash flow remains tight.

• Financial Monitoring:

  • Implement tighter cash flow forecasting and management controls to detect early warning signs of distress.
  • Maintain regular financial reviews to track key ratios and ensure corrective actions are timely.

• Operational Efficiency:

  • Given the small size, ensure operational expenses are optimized and aligned with revenue inflows.

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