AT MECHANICAL LIMITED

Executive Summary

AT Mechanical Limited shows typical start-up financial stress with negative working capital but positive equity supported by tangible assets. The company faces liquidity challenges that require immediate attention to cash flow management and supplier negotiations. With focused financial controls and group support, the outlook can improve, positioning the business for sustainable growth.

AT MECHANICAL LIMITED - Analysis Report

Company Number: 15154015

Analysis Date: 2025-07-29 12:48 UTC

Financial Health Assessment Report: AT Mechanical Limited
Assessment Date: April 2025

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1. Financial Health Score: C

Explanation:
AT Mechanical Limited, a newly incorporated private limited company operating in plumbing, heat and air-conditioning installation, and electrical installation, shows early-stage financial results with some signs of strain. The company has a negative net working capital (net current assets) indicating short-term liquidity challenges, but maintains positive shareholders’ funds supported by tangible fixed assets. Given this mixed picture typical of a start-up phase, the grade is a cautious C, reflecting moderate health but with clear areas needing attention.

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2. Key Vital Signs

Metric	Value (£)	Interpretation
Current Assets	38,159	Includes cash, debtors, and stock; adequate but limited liquidity buffer.
Cash Balance	10,256	Cash on hand is modest; suggests limited immediate cash reserves.
Current Liabilities	56,614	Obligations due within a year exceed current assets, indicating potential liquidity stress.
Net Current Assets	-18,455	Negative working capital signals "symptoms of distress" in short-term financial health.
Fixed Assets (Tangible)	38,672	Investment in equipment and vehicles supports operational capacity but is a less liquid asset.
Shareholders’ Funds	20,217	Positive equity base reflects initial capital and retained earnings; "healthy foundation."
Trade Debtors	16,082	Represents unpaid customer invoices; good that business is generating receivables.
Trade Creditors	29,203	Amount owed to suppliers; company may be delaying payments or facing supplier pressure.
Amounts owed to Group	23,019	Significant intercompany debt; reliance on group funding to cover liabilities.
Employee Count	4	Small workforce consistent with start-up phase.

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3. Diagnosis: Evaluation of Financial Health

• Liquidity Status: The company’s negative net current assets (-£18,455) are a primary concern. This "symptom" suggests AT Mechanical Limited does not currently have enough liquid resources to cover its short-term debts without relying on additional funds or credit. The cash balance (£10,256) alone covers less than 20% of current liabilities.

• Asset Structure: The firm has invested heavily in fixed assets (£38,672), mainly motor vehicles and fixtures, which are essential for its trade but not easily convertible to cash quickly. This illiquidity in assets compounds short-term cash flow pressure.

• Capital Adequacy: Shareholders’ funds (£20,217) remain positive, indicating the company has not yet accumulated losses at the equity level. However, this is largely due to initial capital and accounting treatment, as no profit and loss statement is filed (exempted under small company rules).

• Reliance on Group Funding: The company owes £23,019 to group undertakings, suggesting dependence on related parties for funding. This can be a lifeline but also a risk if group support decreases.

• Growth and Operating Performance: No turnover or profit data is available due to filing exemption, so operational "vital signs" such as profitability and cash flow from operations cannot be fully assessed. The presence of trade debtors and creditors indicates active trading.

• Business Lifecycle Stage: As a company incorporated in September 2023 and reporting its first financial year ending September 2024, AT Mechanical Limited is in the "start-up phase." Early financial stress is common at this stage as the business invests in assets and builds its customer base.

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4. Recommendations: Path to Improved Financial Wellness

• Improve Liquidity Management:

  • Tighten credit control to accelerate debtor collections and reduce days sales outstanding.
  • Negotiate extended payment terms with suppliers to better match cash inflows and outflows.
  • Increase cash reserves through additional capital injections or short-term financing to cover immediate liabilities.

• Monitor and Manage Working Capital:

  • Reduce stock levels where possible to free up cash without compromising service delivery.
  • Closely track and forecast cash flow to anticipate liquidity needs and avoid distress.

• Leverage Group Support Prudently:

  • Maintain clear agreements with AT Group Investments Ltd regarding intercompany loans and repayment terms to ensure transparency and financial stability.

• Focus on Profitability and Revenue Growth:

  • Develop strategies to boost sales volumes and margins in core service areas (plumbing, heating, electrical installation).
  • Control operating expenses, especially overheads related to staff and vehicle maintenance.

• Prepare for Future Reporting:

  • Although currently exempt, plan for fuller financial disclosures and audits as company grows, to build credibility with lenders and investors.

• Consider Professional Financial Guidance:

  • Engage accountants or business advisors to establish robust financial controls and forecasting processes.

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Medical Analogy Summary

AT Mechanical Limited’s financial health is akin to a patient in the early stages of recovery after surgery: the foundational structures are strong (positive equity and assets), but there are clear "symptoms of distress" in liquidity that must be managed to avoid complications. With attentive care to cash flow and working capital, the company can stabilize and build a "healthy financial pulse" for growth.

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