CHANNING ELECTRICAL LTD

Executive Summary

Channing Electrical Ltd has experienced a marked decline in financial position over the latest year, with very low net assets and significant working capital deficits. Liquidity is tight, and reliance on director loans raises credit concerns. Given these factors, credit extension is not advisable until clear evidence of financial recovery is demonstrated.

CHANNING ELECTRICAL LTD - Analysis Report

Company Number: 12846430

Analysis Date: 2025-07-20 15:20 UTC

1. Credit Opinion: DECLINE
   Channing Electrical Ltd exhibits significant financial deterioration in the latest fiscal year ending August 2024. The company has moved from positive net assets (£11,475 in 2023) to barely positive net assets (£189), with a substantial working capital deficit and a large director’s loan account liability. These factors pose a high credit risk, indicating potential difficulty in meeting short-term obligations and servicing debt. Without evidence of a clear turnaround or additional capital injection, extending credit facilities is not recommended at this time.

2. Financial Strength:
   The balance sheet reveals a sharp decline in fixed and current assets year-on-year. Tangible fixed assets decreased from £15,910 to £11,933, while current assets plummeted from £20,563 to £4,029. Debtors dropped significantly from £16,739 to £2,951, suggesting a reduction in sales or collection issues. Current liabilities remain substantial at £15,773, leading to a negative net current asset position of -£11,744. The director’s loan account has increased markedly to £13,322, raising concerns about reliance on related-party funding and financial stability.

3. Cash Flow Assessment:
   Cash reserves have diminished from £3,324 to £1,078, reducing liquidity buffers. The large negative working capital indicates potential cash flow strain in meeting short-term liabilities. The substantial director’s loan suggests external financing is currently required to sustain operations. The decline in debtors and cash could reflect slower collection cycles or reduced business volume, both of which impair the company’s ability to generate consistent operating cash flow.

4. Monitoring Points:

• Working capital and liquidity improvements: watch if net current assets recover to positive territory.
• Debtor turnover and cash collection efficiency: assess for timely cash inflows.
• Director’s loan account: monitor changes in related-party funding and repayment plans.
• Profitability trends and revenue growth: track to determine if the business can restore financial health.
• Filing of next accounts and confirmation statement to ensure ongoing compliance and transparency.