CDD BIRMINGHAM LIMITED

Executive Summary

CDD Birmingham Limited shows a growing asset base and positive equity but is currently experiencing liquidity challenges, evidenced by negative working capital and low cash reserves. To ensure continued financial health, the company should focus on improving cash flow management and reducing reliance on director advances. Addressing these issues will strengthen its short-term financial resilience and support sustainable growth.

CDD BIRMINGHAM LIMITED - Analysis Report

Company Number: 13595585

Analysis Date: 2025-07-29 19:03 UTC

Financial Health Assessment of CDD Birmingham Limited (Year Ended 30 April 2024)

---

1. Financial Health Score: C+

Explanation:
CDD Birmingham Limited shows moderate financial strength with positive net assets growth but displays symptoms of short-term liquidity stress, indicated by persistent negative net current assets (working capital). The company's tangible asset base is growing healthily, but the current liabilities outweigh current assets, which warrants caution. The score reflects a company that is stable but must address cash flow and working capital management to avoid financial distress.

---

2. Key Vital Signs

Metric	2024 Value (£)	Interpretation
Net Current Assets (Working Capital)	-8,198	Negative working capital signals liquidity strain; current liabilities exceed current assets. This "symptom" of financial stress could challenge the company’s short-term ability to meet obligations.
Net Assets (Equity)	27,620	Positive and increasing equity base suggests growing shareholder value and financial "vitality."
Fixed Assets (Net book value)	35,818	Healthy investment in tangible assets, increasing from prior year, indicating growth and capacity building.
Cash on Hand	1,025	Very low cash reserves compared to liabilities, a "weak pulse" on immediate liquidity.
Debtors	9,300	Moderate receivables, but must be monitored to ensure timely collection to improve cash flow.
Current Liabilities	43,523	Substantially higher than current assets, indicating short-term obligations outpace liquid resources.
Director’s Creditors	16,848	Significant amount owed to directors within creditors; may indicate reliance on director financing to maintain operations.

---

3. Diagnosis

CDD Birmingham Limited is experiencing symptoms of liquidity stress due to consistently negative working capital. This "cash flow constriction" suggests the company may struggle to cover immediate debts with existing liquid assets. The low cash balance exacerbates this concern despite increased investment in fixed assets, which are less liquid.

The growth in net assets (from £17,309 in 2023 to £27,620 in 2024) and substantial additions to tangible assets indicate an expansion phase, and shareholder funds are increasing, which is a positive sign of underlying business growth and retained earnings accumulation.

However, the imbalance between current liabilities and current assets signals an unhealthy cash conversion cycle or potential over-reliance on short-term credit, including director loans. This could be a "warning sign" of financial strain if not addressed promptly.

The company benefits from being up-to-date with filings, indicating good compliance and governance practices, which are important for maintaining business "vitality."

---

4. Recommendations

• Improve Working Capital Management:
  Implement stricter credit control to reduce debtor days and free up cash. Review stock levels (noted £25,000 in stock in 2024) to avoid overstocking, which ties up cash.

• Enhance Cash Reserves:
  Focus on building cash balances to provide a healthy liquidity buffer. Consider short-term financing options or negotiate better terms with suppliers to ease cash flow pressures.

• Monitor Director Advances:
  The significant amount owed to directors suggests reliance on director funding. Formalize these arrangements and plan to reduce dependence by improving operational cash flow.

• Asset Utilization Review:
  Ensure that increased fixed assets contribute effectively to revenue generation. Avoid over-investment in fixed assets without corresponding cash inflows.

• Financial Forecasting and Stress Testing:
  Conduct regular cash flow forecasting and scenario planning to anticipate liquidity shortfalls and plan mitigation strategies.

• Cost Management:
  Tighten operational costs where possible to improve profitability and reduce pressure on working capital.

---