ASSET MAINTENANCE (CHESTERFIELD) LIMITED

Executive Summary

Asset Maintenance (Chesterfield) Limited currently shows early signs of financial recovery with improved working capital and modest equity, but suffers from zero cash reserves and reliance on bank debt, indicating fragile financial health. Immediate focus should be on improving cash flow management and strengthening the equity base to build a healthier financial foundation. With timely action, the company can stabilize and prepare for sustainable growth.

ASSET MAINTENANCE (CHESTERFIELD) LIMITED - Analysis Report

Company Number: 14062505

Analysis Date: 2025-07-19 11:53 UTC

Financial Health Assessment of ASSET MAINTENANCE (CHESTERFIELD) LIMITED

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1. Financial Health Score: C

Explanation:
The company shows signs of early-stage financial recovery with modest positive net current assets as of March 2024. However, prior periods indicate periods of working capital deficit and very thin equity, reflecting an underlying fragile financial position. The absence of cash on the latest balance sheet and reliance on debt financing are symptoms of financial stress that require management attention. Overall, the company is neither in robust health nor in immediate crisis but is at a delicate stage needing careful financial management.

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2. Key Vital Signs

Metric	Latest (31 Mar 2024)	Interpretation
Net Current Assets	£4,911	Positive, indicates short-term liquidity improved but still low buffer.
Current Liabilities	£24,630	Significant short-term obligations; manageable but warrants monitoring.
Debtors (Receivables)	£29,541	High relative to liabilities, showing potential cash inflow if collected timely.
Cash	£0	No cash reserves; a critical symptom of liquidity strain.
Shareholders’ Funds (Equity)	£9,754	Low equity base, but improved from near zero last year; indicates thin capital cushion.
Fixed Assets (Net Book Value)	£4,843	Tangible assets present; moderate investment in plant and machinery.
Bank Loans & Overdrafts	£11,223	Growing reliance on bank debt; could increase financial risk if not managed.
Taxation & Social Security Payables	£10,888	High liability; must be managed to avoid penalties and cash flow disruption.

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3. Diagnosis

• Liquidity and Working Capital:
  The company had a negative working capital position in the prior years but improved to a small positive net current asset position recently. However, the complete absence of cash reserves is a "red flag" — this is akin to having vital organs functioning but the heart (cash) showing weakness. The company’s ability to meet immediate obligations depends heavily on converting debtors to cash swiftly.

• Profitability and Reserves:
  The financial statements do not disclose a profit and loss account, but retained earnings moved from £149 to £9,654, indicating some profitability or capital injection in the latest period. However, the small retained earnings balance points to limited accumulated profits — the company's "immune system" to absorb shocks is weak.

• Capital Structure and Risk:
  With only £100 in share capital and low equity, the company is thinly capitalized. Bank loans and overdrafts increased, which raises financial risk, especially without cash reserves. The company is showing symptoms of financial stress but is not yet in critical condition.

• Operational Scale:
  The company operates in a specialised construction niche with only 2 employees on average, consistent with a micro or small business profile. The limited scale constrains its capacity to generate large cash flows but also limits fixed costs.

• Compliance and Governance:
  The company has timely filed accounts and confirmation statements, indicating good regulatory compliance. Directors are active and have significant ownership and control, which supports aligned management interests.

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4. Recommendations

• Improve Cash Reserves:
  Prioritize converting debtors into cash through tighter credit control and prompt invoicing. Consider negotiating payment terms with clients to accelerate cash inflows.

• Manage Current Liabilities:
  Engage with creditors and tax authorities to schedule payments and avoid penalties. Explore options to restructure or refinance bank loans to reduce short-term pressure.

• Strengthen Equity Base:
  Consider capital injection from shareholders or retained earnings reinvestment to increase the equity buffer. This will improve solvency and investor confidence.

• Enhance Financial Monitoring:
  Implement regular cash flow forecasting and working capital analysis to detect and react promptly to liquidity issues—think of this as ongoing health monitoring to catch symptoms early.

• Operational Efficiency:
  Review operational costs and resource allocation to improve profitability margins and generate healthier cash flow.

• Prepare for Growth:
  Once liquidity stabilizes, explore opportunities for scaling operations cautiously to improve financial resilience.

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