A10 ELECTRICAL SOLUTIONS LTD

Executive Summary

A10 Electrical Solutions Ltd is facing significant financial challenges with negative working capital and eroded shareholder funds indicating liquidity and solvency concerns. Without prompt corrective actions such as improving cash flow, restructuring debts, and injecting capital, the company risks deeper financial distress. Immediate financial discipline and strategic interventions are recommended to restore health and sustainability.

A10 ELECTRICAL SOLUTIONS LTD - Analysis Report

Company Number: 13133178

Analysis Date: 2025-07-20 11:03 UTC

Financial Health Assessment for A10 Electrical Solutions Ltd (as of 31 March 2024)

---

1. Financial Health Score: D

Explanation:
A grade of D indicates the company is showing significant signs of financial distress. The net liabilities position, negative working capital, and erosion of shareholder funds signal vulnerability and potential solvency concerns. While the company is still operational, urgent corrective measures are needed to restore financial health.

---

2. Key Vital Signs

Metric	2024 Value (£)	Interpretation
Fixed Assets	4,424	Small asset base; slight decline from previous year.
Current Assets	81,695	Adequate short-term asset pool but has declined.
Current Liabilities	104,851	High short-term obligations; increased from prior year.
Net Current Assets (Working Capital)	-23,156	Negative working capital ("symptom of distress"); indicates liquidity issues.
Total Assets less Current Liabilities	-18,732	Negative value; total liabilities exceed total assets net of current liabilities.
Net Assets / Shareholders' Funds	-20,763	Negative equity; company is insolvent on a balance sheet basis.
Share Capital	1,000	Nominal capital; no significant buffer for losses.
Average Number of Employees	3	Small workforce consistent with micro entity classification.

---

3. Diagnosis: What the Financial Data Reveals About Business Health

• Liquidity Strain: The company exhibits a "symptom of distress" with negative net current assets of £23,156. This means short-term liabilities exceed short-term assets by a substantial margin, risking the company's ability to meet immediate obligations without additional financing or asset sales.

• Balance Sheet Insolvency: The company's net assets have deteriorated from a positive £224 in 2023 to a negative £20,763 in 2024, indicating accumulated losses or write-downs. This "unhealthy cash flow" posture suggests the company has been incurring losses or facing debt pressures that erode equity.

• Declining Asset Base: Fixed assets have decreased from £6,427 to £4,424, possibly from disposals or depreciation, reducing the company's long-term asset cushion.

• Increase in Current Liabilities: Current liabilities have risen sharply by over £16,000, indicating more short-term debts or payables, which compounds liquidity risk.

• Small Scale Operation: As a micro-entity with 3 employees and modest share capital, the company has limited operational and financial scale to absorb shocks.

• Control and Governance: Sole control by Mr. Dale Hunter (75-100% ownership and voting rights) indicates centralized decision-making, which can be agile but may lack external oversight.

---

4. Recommendations: Specific Actions to Improve Financial Wellness

• Improve Cash Flow Management:
  Prioritize collection of receivables and manage payables to improve liquidity. Consider negotiating longer payment terms with suppliers or seeking short-term credit lines to bridge current gaps.

• Cost Control and Profitability:
  Review operational expenses to identify cost-cutting opportunities without compromising service quality. Aim to restore profitability to rebuild reserves and equity.

• Debt Restructuring:
  Engage with creditors to restructure or extend current liabilities to reduce immediate cash outflows and avoid insolvency risks.

• Capital Injection:
  Consider additional equity funding or shareholder loans to shore up the balance sheet and provide working capital.

• Asset Utilization:
  Analyze fixed assets for potential sale or better utilization to generate cash.

• Regular Financial Monitoring:
  Implement monthly financial reviews focusing on liquidity ratios, cash flow forecasts, and early warning indicators to proactively address emerging issues.

• Seek Professional Advice:
  Consult with financial advisors or turnaround specialists for tailored restructuring strategies.

---

Medical Analogy Summary:

A10 Electrical Solutions Ltd is currently exhibiting "symptoms of financial distress" akin to a patient with low blood pressure and weak pulse—its liquidity (cash flow) is insufficient to meet short-term obligations, and its "body" (balance sheet) shows signs of "organ failure" with negative net assets. Immediate "treatment" through cost management, capital infusion, and debt restructuring is essential to stabilize and recover.

---