BURTON'S ENGINEERING SERVICES LTD

Executive Summary

Burton's Engineering Services Ltd demonstrates solid financial health with strong working capital and growing net assets, indicating good business management and operational stability. A notable reduction in cash reserves warrants close monitoring of liquidity and receivables management to maintain this healthy position. With prudent cash flow oversight and continued creditor management, the company is well-positioned for sustainable growth.

BURTON'S ENGINEERING SERVICES LTD - Analysis Report

Company Number: 12557338

Analysis Date: 2025-07-20 12:52 UTC

Financial Health Assessment for BURTON'S ENGINEERING SERVICES LTD
As at 30 April 2024

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1. Financial Health Score: B

Explanation:
The company demonstrates solid financial health with strong net current assets and net asset growth over recent years. It maintains a healthy working capital position and positive retained earnings. However, some caution is warranted due to a reduction in cash reserves and debtor balances compared to the prior year, which could signal tighter liquidity. Overall, the company is financially stable but should monitor cash flow closely.

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2. Key Vital Signs

Metric	2024 (£)	2023 (£)	Interpretation
Current Assets	609,899	734,254	Decrease mainly due to lower cash and debtors; still strong liquidity base.
Cash at Bank	217,976	306,891	Cash reserves dropped by ~29%, warrants monitoring for liquidity stress.
Debtors	391,923	427,363	Decrease in receivables may improve cash flow but could reflect lower sales or collection issues.
Current Liabilities	180,919	417,124	Significant reduction indicates improved short-term solvency and creditor management.
Net Current Assets	428,980	317,130	Healthy positive working capital; increased buffer to pay short-term debts.
Net Assets	448,103	344,809	Steady growth reflects business value and retained earnings accumulation.
Share Capital	100	100	Nominal; typical for small private limited companies.
Employees	2	2	Small workforce, consistent size.

• Working Capital Health: The difference between current assets and current liabilities is robust (£429k), indicating the company can comfortably cover short-term obligations — a sign of a "healthy cash flow system."
• Liquidity: Cash at bank forms a substantial part of current assets, though it fell significantly year-on-year, which could be a "symptom of liquidity tightening."
• Receivables: Debtors represent a large portion of current assets; effective credit control is important to avoid cash flow strain.
• Leverage: No indication of long-term liabilities or loans; balance sheet is equity funded, which is a "strong heart" for the company.

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3. Diagnosis

Burton's Engineering Services Ltd shows a stable financial condition typical of a small engineering business with controlled growth. The company's financial "vital signs" such as net assets and working capital have improved, indicating sound management of resources and profitable operations (suggested by retained earnings growth).

The reduction in current liabilities by more than half is a positive "sign of recovery," potentially from improved creditor terms or payment strategies. However, the drop in cash reserves and debtors could indicate tighter liquidity or seasonal fluctuations in sales and collections.

The company has a low fixed asset base relative to current assets, implying a business model that is less capital-intensive and more reliant on operational efficiency and receivables management.

No red flags such as overdue filings, director disqualifications, or negative net assets are present. Directors appear engaged and the business is compliant with filing deadlines.

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4. Recommendations

• Enhance Cash Flow Monitoring:
  Given the noticeable decline in cash reserves, implement tighter cash flow forecasting and regular liquidity reviews to detect and respond to any "early symptoms" of cash shortages.

• Strengthen Debtor Management:
  Review credit control policies to ensure timely collection of receivables and minimise bad debts. Consider offering incentives for early payment or stricter credit terms where feasible.

• Maintain Creditor Relationships:
  Continue managing short-term liabilities prudently to keep the working capital healthy. Negotiate favourable payment terms to preserve liquidity.

• Consider Asset Utilisation:
  Evaluate whether existing fixed assets are optimally used or if investments in equipment could improve operational efficiency and profitability.

• Plan for Growth Carefully:
  With a small team and modest capital, focus on sustainable growth strategies that do not overstretch financial resources.

• Regular Financial Health Check-ups:
  Schedule periodic reviews of key financial metrics similar to this diagnostic approach to catch any "symptoms of distress" early.

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