BROWN'S BUILDING DEVELOPMENT LIMITED

Executive Summary

BROWN'S BUILDING DEVELOPMENT LIMITED is financially stable with positive net assets, improving equity, and sufficient working capital, reflecting good financial health. However, the company shows symptoms of liquidity risks due to decreasing cash and dependence on related party loans and receivables. Strengthening cash management and diversifying funding sources will enhance its financial resilience going forward.

BROWN'S BUILDING DEVELOPMENT LIMITED - Analysis Report

Company Number: 13191082

Analysis Date: 2025-07-29 17:26 UTC

Financial Health Assessment of BROWN'S BUILDING DEVELOPMENT LIMITED

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1. Financial Health Score: B

Explanation:
The company demonstrates a generally stable financial condition with positive net assets and improving working capital over recent years. However, some warning signs such as a reduction in cash balances and reliance on director and related party loans indicate room for improvement. The score reflects a "healthy but cautious" state akin to a patient with good vital signs but under observation for potential stress factors.

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2. Key Vital Signs

Metric	2025 Value	Interpretation
Fixed Assets	£14,123	Modest investment in tangible assets, stable.
Current Assets	£194,219	Strong short-term asset base, primarily debtors.
Cash at Bank	£51,151	Moderate cash reserves but decreasing trend.
Debtors	£143,068	High trade receivables, major portion from related company.
Current Liabilities	£142,516	Current debts nearly equal to current assets, manageable working capital.
Net Current Assets	£51,703	Positive working capital indicates liquidity.
Long-term Creditors	£4,260	Small long-term obligations, manageable.
Deferred Tax Liability	£2,640	Moderate deferred tax, non-cash liability.
Net Assets	£58,926	Positive net worth indicates solvency.
Shareholders’ Funds	£58,926	Retained earnings are growing, reflecting profitability.
Related Party Loans	£126,050 (approx.)	Reliance on director loans is a potential risk.

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3. Symptoms Analysis and Diagnosis

• Liquidity & Cash Flow:
  The company shows "healthy cash flow" with positive net current assets of £51,703, indicating it can cover short-term obligations comfortably. However, cash at bank decreased from £75,218 in 2024 to £51,151 in 2025, signaling tighter cash flow or increased spending/investment. Management should monitor this "pulse" closely to avoid liquidity stress.

• Asset Utilization:
  Fixed assets are stable but not growing, suggesting the company is not over-investing in long-term assets—a cautious but sensible approach. Tangible assets are primarily vehicles and machinery, appropriate for a building development business.

• Receivables Concentration:
  A large portion of current assets (£139,068) is due from a related company, Byron Brown Developments Limited, on an interest-free, repayable-on-demand basis. This "symptom of dependency" raises concerns about cash flow risk if the associated company faces difficulties. Trade receivables outside related parties are low (£4,000), possibly indicating limited external sales or slow collections.

• Liabilities and Capital Structure:
  Current liabilities have reduced from £183,949 in 2024 to £142,516 in 2025, improving the working capital position. However, significant director loans (£126,050 combined) represent informal financing, which can be less stable than bank financing and pose risks if directors’ personal finances change.

• Profitability & Retained Earnings:
  Shareholders’ funds grew substantially from £40,402 in 2024 to £58,926 in 2025, indicating retained profits and a "strengthening financial constitution." The company is evidently generating profits and retaining earnings to build equity.

• Risk Factors:
  The company depends heavily on related party transactions for funding and receivables, which may mask underlying operational cash flow issues. Also, no audit was required, so financial controls and reliability of figures depend heavily on internal governance.

Overall Diagnosis:
BROWN'S BUILDING DEVELOPMENT LIMITED exhibits a stable and solvent financial profile with positive growth in equity and manageable liabilities. The "symptoms" of strong working capital and profitability are promising, but reliance on related party loans and high debtor concentration from an associated company require careful management oversight.

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4. Recommendations

• Diversify Receivables:
  Aim to reduce reliance on related party debtors by expanding external customer base or accelerating trade receivable collections to reduce liquidity risk.

• Improve Cash Reserves:
  Monitor cash flow closely to prevent future cash crunches. Consider formalising financing arrangements to reduce dependence on director loans.

• Strengthen Financial Controls:
  Although exempt from audit, implementing internal financial reviews or voluntary audits would enhance confidence in financial reporting and early detection of issues.

• Plan for Asset Replacement:
  Fixed assets are aging with depreciation; prepare capital expenditure plans to maintain operational capacity without sudden cash demands.

• Manage Deferred Tax:
  Keep oversight on deferred tax liabilities as these could crystallise to cash outflows in future periods.

• Maintain Compliance:
  Continue timely filing of accounts and confirmation statements to avoid penalties and maintain company reputation.

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