Company Number: SC678768

Analysis Date: 2025-07-29 12:41 UTC

Financial Health Assessment of Anderson & Edwards Ltd (Year ended 31 December 2024)

---

1. Financial Health Score: C

Explanation:
The company shows signs of moderate financial stress with key liquidity metrics deteriorating in the latest year. While the business remains solvent and operational, the sharp decline in net current assets and net equity indicates symptoms of financial strain. The score "C" reflects a company that is still functional but requires careful management to avoid worsening distress.

---

2. Key Vital Signs

Metric	2024 (£)	2023 (£)	Interpretation
Current Assets	83,146	62,513	Increased, indicating more resources available to meet short-term obligations.
Cash and Cash Equivalents	54,845	44,293	Healthy cash balance, showing good cash availability ("healthy cash flow").
Debtors	18,071	14,045	Moderate increase, manageable but requires monitoring for collection efficiency.
Current Liabilities	82,303	55,584	Significant increase, signaling rising short-term obligations ("symptom of potential liquidity strain").
Net Current Assets (Working Capital)	843	6,929	Sharp decline, approaching minimal working capital, indicating potential cash flow pressure.
Net Assets (Equity)	5,923	10,545	Decreased by ~44%, equity buffer shrinking, indicating retained earnings erosion or losses.
Provisions for Liabilities	1,694	1,205	Increased provisions, possibly for anticipated expenses or liabilities, adding to financial burden.
Tangible Fixed Assets	6,774	4,821	Increased investment in fixed assets, possibly signaling growth or capital expenditure.
Stock	10,230	4,175	Increased stock levels—needs assessment if tied up capital is productive or a risk of obsolescence.

---

3. Diagnosis

The financial "vital signs" paint a picture of a company under moderate financial stress, akin to a patient with a borderline health condition requiring immediate lifestyle adjustments. Despite increasing current assets and cash reserves—generally positive signs—the company’s current liabilities have risen sharply, squeezing working capital to a dangerously low level (£843). This “symptom” suggests potential liquidity issues, where short-term debts are nearly equal to current assets, risking cash flow interruptions.

The net asset decline from £10,545 in 2023 to £5,923 in 2024 signals that accumulated profits have been partially eroded, which may be due to increased expenses, provisions for liabilities, or other operational challenges. The increase in provisions and stock may be adding strain on resources, potentially tying up cash that could otherwise support daily operations.

However, the company’s cash balance remains relatively strong, a positive sign of "healthy cash flow" that can provide a buffer if managed prudently. The directors, who are qualified professionals (a Chartered Accountant and a Chartered Tax Advisor), are likely aware of these symptoms and the need for corrective action.

Overall, the company is "stable but vulnerable"—still solvent and active, but with warning signs that require attention to avoid financial distress.

---

4. Recommendations

• Enhance Cash Flow Management:
  Tighten credit control to reduce debtor days and improve cash inflows. Monitor stock levels carefully to avoid excessive inventory tying up cash.

• Manage Current Liabilities:
  Negotiate extended payment terms with creditors where possible to ease short-term cash pressures.

• Review Provisions and Contingencies:
  Analyze the nature of increased provisions to determine if any can be mitigated or deferred.

• Cost Control and Profitability:
  Conduct a thorough review of operating expenses to identify cost-saving opportunities without compromising service quality.

• Regular Financial Monitoring:
  Implement monthly cash flow forecasting and working capital analysis to detect early signs of distress.

• Strategic Growth Assessment:
  Ensure capital expenditure is aligned with clear returns to avoid overextension of financial resources.

• Stakeholder Communication:
  Maintain transparent communication with shareholders and creditors to build confidence and negotiate flexibility if needed.

---