CERTUS ELECTRICAL LTD

Executive Summary

CERTUS ELECTRICAL LTD is a financially stable micro business with improving liquidity and equity, reflecting healthy operational performance in its early years. The company benefits from strong working capital but should focus on managing debtors and expanding capacity to support future growth. With prudent financial and operational management, the business is well-positioned for continued development and financial wellness.

CERTUS ELECTRICAL LTD - Analysis Report

Company Number: 13890017

Analysis Date: 2025-07-20 18:49 UTC

Financial Health Assessment for CERTUS ELECTRICAL LTD (as at 31 January 2024)

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1. Financial Health Score: B

Explanation:
CERTUS ELECTRICAL LTD shows a generally healthy financial position with steady growth in net assets and working capital over the last two years. The company maintains positive net current assets and growing shareholders’ funds, indicating sound liquidity and solvency. However, the business is still in its early years, with limited fixed assets and a single employee, which suggests it is at a developmental stage and potentially vulnerable to operational risks or market fluctuations. Thus, a “B” grade reflects solid fundamentals but room for strengthening financial resilience.

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2. Key Vital Signs (Core Financial Metrics)

Metric	2024 Value (£)	2023 Value (£)	Interpretation
Fixed Assets	3,332	4,513	Small asset base, slightly declining; typical for a service business relying on skills rather than heavy equipment.
Current Assets	13,965	9,155	Increased, mainly driven by higher debtors and cash—indicates growing business activity and good cash collection.
Cash at Bank	2,661	1,508	Healthy increase in cash reserves, improving liquidity “oxygen” for day-to-day operations.
Debtors	11,304	7,647	Increase suggests rising sales on credit; needs monitoring to avoid cash flow strain.
Current Liabilities	8,199	6,364	Increased liabilities, but still manageable given growth in current assets; watch for short-term obligations.
Net Current Assets	5,766	2,791	Strong increase, signaling improved working capital and ability to cover short-term debts comfortably.
Net Assets (Equity)	9,098	7,304	Growing equity base reflects retained earnings and business growth; positive “balance sheet strength”.
Shareholders’ Funds	9,098	7,304	Matches net assets; indicates no hidden liabilities and transparent equity position.
Employee Count	1	1	Sole operator business, which may limit scalability and operational risk diversification.

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3. Symptoms Analysis (What the Numbers Reveal)

• Healthy Cash Flow Indicators:
  Cash reserves have nearly doubled year-on-year, showing good cash management and providing a buffer for operational needs.

• Working Capital Improvement:
  Net current assets more than doubled, reducing liquidity risk and indicating the company can meet short-term liabilities comfortably.

• Growing Debtors:
  The rise in trade debtors could be a sign of expanding sales but also a symptom of extended credit terms or slower collections that require active monitoring to avoid cash flow “tightness.”

• Limited Fixed Assets:
  Low tangible fixed assets are typical for an electrical installation and construction service company, relying more on skills than heavy equipment. The slight decrease suggests no new major capital investments, which could impact capacity expansion.

• Small Scale & Single Employee:
  The company is essentially a micro business with one director/employee, reflecting a lean operation but also exposing it to personal capacity and risk.

• Exemption from Audit:
  As a small company, the accounts are unaudited abridged accounts, which limits external assurance but is standard practice for micro entities.

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4. Diagnosis (Overall Financial Condition)

CERTUS ELECTRICAL LTD is in a stable and growing financial condition. The company shows clear signs of business development with increased assets, equity, and liquidity. The financial “vital signs” indicate a healthy balance sheet and improved working capital strength, suggesting the company can meet obligations and invest in ongoing operations.

However, the company remains small and dependent on a single director/operator, which poses operational risk and limits scalability. The increase in debtors means cash flow should be actively managed to avoid potential strain. The limited fixed assets and single employee may constrain growth but keep overheads low.

In medical terms, the company shows "good cardiovascular health" with strong liquidity and equity but requires "strengthening in muscular support"—meaning investment in capacity and possibly workforce to support future growth and reduce single-person dependency.

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5. Prognosis (Future Financial Outlook)

Given current trends, CERTUS ELECTRICAL LTD is likely to continue its growth trajectory if it maintains:

• Efficient debtor management to ensure cash flow remains healthy.
• Strategic reinvestment in business capacity, possibly increasing fixed assets or workforce.
• Vigilance over liabilities and operational risks inherent in a sole-operator business.

If these factors are managed well, the company’s financial health should improve to an "A" grade in coming years. Conversely, failure to diversify capacity or control receivables could cause cash flow “symptoms” that may stress the business.

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6. Recommendations

• Enhance Cash Flow Monitoring:
  Implement tighter credit control procedures to reduce debtor days and avoid cash flow pinch points.

• Consider Capacity Expansion:
  Explore hiring additional skilled staff or subcontractors to reduce operational risk and increase project capacity.

• Invest in Fixed Assets Wisely:
  While not asset-heavy, consider necessary equipment upgrades or tools that could improve efficiency without overextending capital.

• Maintain Strong Working Capital:
  Continue building net current assets to safeguard against unexpected liabilities or downturns.

• Plan for Future Growth:
  Develop a formal business plan outlining scaling strategies, financial forecasts, and risk mitigation.

• Regular Financial Reviews:
  Frequent review of financial metrics and early warning signs will help maintain business “health” and enable proactive management.

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