CABLES ELECTRICAL LTD

Executive Summary

CABLES ELECTRICAL LTD is currently in a precarious financial position, characterized by negative net assets and a significant drop in fixed assets, signaling potential solvency issues. While short-term liquidity remains positive, urgent measures including capital injection and improved cash flow management are essential to restore financial health and ensure sustainable operations.

CABLES ELECTRICAL LTD - Analysis Report

Company Number: 12450442

Analysis Date: 2025-07-20 19:16 UTC

Financial Health Assessment Report
Company: CABLES ELECTRICAL LTD
Assessment Date: Financial year ended 29 February 2024

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1. Financial Health Score: D

Explanation:
The company shows troubling signs of financial distress with persistent negative net assets and a sharp decline in fixed assets. While there is some working capital, the overall net asset position is negative, indicating financial instability. Immediate attention to capital structure and cash flow management is essential for recovery.

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2. Key Vital Signs (Core Financial Metrics):

Metric	2024 Value (£)	Interpretation
Fixed Assets	1,000	Significant drop from prior years (£13,595 in 2023). Indicates possible asset disposals or impairments—a symptom of distress.
Current Assets	1,124	Very low current assets reflecting limited available liquidity.
Current Liabilities	2,555	Current liabilities exceed current assets, but net current assets reported as positive (£1,124) due to classification of some liabilities possibly as long-term.
Net Current Assets	1,124	Positive, indicating some short-term liquidity to cover immediate debts.
Creditors (>1 year)	2,555	Long-term liabilities still outweigh current assets, impacting solvency.
Net Assets (Shareholders' Funds)	-431	Negative net worth—a critical symptom showing liabilities exceed assets, indicating balance sheet insolvency.
Share Capital	1.00	Minimal equity capital, offering little buffer against losses.
Employee Count	2	Small workforce consistent with micro entity status.

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3. Diagnosis: What the Financial Data Reveals About Business Health

Symptoms Analysis:

• The company has been operating for approximately four years. Initially, it had a positive net asset position (£6,379 in 2020), but since then, it has shown a consistent decline in net assets, turning negative since 2021 and remaining so through 2024.
• The drastic reduction in fixed assets from £13,595 in 2023 to £1,000 in 2024 suggests asset sales or write-downs, possibly to raise cash or due to asset impairment.
• Current assets have also dropped significantly, indicating diminished cash or receivables.
• Despite negative net assets, the company maintains a small positive net current asset position, which is a slight relief but insufficient to offset overall solvency concerns.
• Share capital is nominal (£1), implying limited initial equity injection and little capital cushion against losses.
• The change in director and secretary in late 2023 may indicate a strategic or operational shift, often reflecting attempts to address challenges.
• The company remains active with no overdue filings, suggesting compliance discipline which is a positive sign.

Overall Financial Condition:
The company is showing clear symptoms of financial distress, mainly highlighted by negative shareholders’ funds (net liabilities) and a sharp fall in fixed assets. These are classic signs of balance sheet weakness and potential solvency issues. The positive net current assets provide some short-term operating liquidity, but the long-term outlook without capital infusion or profitability improvement is concerning.

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4. Recommendations: Specific Actions to Improve Financial Wellness

• Capital Injection: Seek fresh equity investment or director loans to strengthen the balance sheet and eliminate negative net assets, which will improve solvency and creditor confidence.
• Asset Utilization Review: Investigate the cause of fixed asset reduction. If assets were sold to fund operations, consider whether this is sustainable or if asset replacement is necessary for operational continuity.
• Cash Flow Management: Tighten control over receivables and payables to maintain or improve positive net current assets. Healthy cash flow is vital to avoid liquidity crises.
• Profitability Focus: Develop strategies to increase turnover and gross margins, such as targeting higher-value contracts in electrical installation and equipment repair sectors.
• Cost Control: Review operating expenses and overheads to reduce burn rate, particularly given the small size of the company with only two employees.
• Director & Governance: The recent change in company secretary and director presents an opportunity for fresh governance practices. Implement strong financial controls and regular management reporting.
• Engage Professional Advice: Consider consulting insolvency or restructuring specialists early if negative net asset trends continue, to explore formal restructuring options before crisis point.

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Medical Analogy Summary

CABLES ELECTRICAL LTD shows "symptoms of distress" with a weakening "financial pulse" indicated by negative net assets akin to a patient with low blood pressure—there is some short-term liquidity ("healthy cash flow") but underlying structural weakness threatens overall survival. Immediate "treatment" through capital support and operational restructuring is critical to restore "financial health" and avoid "collapse."

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