CHOK BUILDING SOLUTIONS LIMITED

Executive Summary

CHOK BUILDING SOLUTIONS LIMITED is financially stable with healthy working capital and growing equity, indicating operational success. However, high receivables and low cash reserves present liquidity risks that require improved cash flow management. The company is poised for growth but should focus on strengthening cash reserves and governance to maintain financial health.

CHOK BUILDING SOLUTIONS LIMITED - Analysis Report

Company Number: 13682721

Analysis Date: 2025-07-19 13:03 UTC

Financial Health Assessment Report for CHOK BUILDING SOLUTIONS LIMITED

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1. Financial Health Score: B

Explanation:
CHOK BUILDING SOLUTIONS LIMITED demonstrates a reasonably healthy financial position for a relatively young company (incorporated in 2021), with positive net assets and net current assets reported in the latest year. The company has shown a marked improvement from prior periods, recovering from negative working capital to a healthy net current asset position. However, limited information on profitability and cash flow dynamics, combined with significant reliance on debtors, suggests some caution. The grade B reflects a generally stable but still developing financial wellness profile.

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2. Key Vital Signs (Core Financial Metrics)

Metric	2024 (£)	Interpretation
Current Assets	129,774	Adequate short-term assets to meet immediate obligations.
Cash at Bank & In Hand	6,927	Low cash reserves indicate potential liquidity constraints despite positive working capital.
Debtors	122,847	High level of receivables; potential risk if collections are delayed or doubtful.
Current Liabilities	59,969	Manageable short-term obligations lower than current assets, indicating no immediate distress.
Net Current Assets (Working Capital)	69,805	Healthy positive working capital, a strong "pulse" indicating ability to cover short-term debts.
Net Assets (Equity)	131,073	Positive net worth showing company’s value exceeds liabilities — a healthy "balance".
Share Capital	1	Minimal paid-up capital; company likely relies on retained earnings or external finance.
Profit and Loss Reserve	131,072	Accumulated profits retained, reflecting operational success over time.
Fixed Assets (Tangible)	61,268	Investment in plant and tools, showing asset base to support operations; moderate depreciation.
Average Employees	0	No employees reported; may indicate use of subcontractors or directors managing operations.

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3. Diagnosis: Financial Condition and Business Health

• Healthy Working Capital: The company’s net current assets improved from a negative £21,334 in 2021 to a positive £69,805 in 2024. This shift indicates that the company has strengthened its short-term liquidity position, a vital sign of financial health.

• Receivables Concentration: The high level of debtors (£122,847) compared to cash (£6,927) signals a dependency on timely collection of payments. This could be a symptom of delayed client payments or significant credit sales, which if not managed well, may cause liquidity stress.

• Stable Equity Position: The shareholders’ funds increased substantially from £1 in 2022 to £131,073 in 2024. This reflects retained earnings growth and possibly capital injections or value creation from operations, indicating the business is building a solid equity base.

• Asset Utilization and Depreciation: The tangible fixed assets are moderate (£61,268) and have been depreciated appropriately. This suggests the company invests in the essential tools and machinery for its builder’s carpentry and joinery activities, supporting ongoing operations.

• Cash Flow Considerations: The relatively low cash balance compared to current liabilities and receivables suggests the company needs to enhance its cash flow management to avoid liquidity bottlenecks.

• No Employees Reported: The absence of reported employees may imply a business model reliant on subcontractors or owner-directors managing operations. This could be an efficiency strategy but may also present risks in scaling or operational continuity.

• Governance and Control: Two directors hold significant control with voting rights and appointment powers, which simplifies decision-making but requires vigilance to ensure robust corporate governance.

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4. Recommendations: Actions to Improve Financial Wellness

• Improve Cash Flow Management: Focus on accelerating debtor collections to convert receivables into cash more quickly. Consider introducing stricter credit terms or incentivizing early payments to maintain a healthier cash buffer.

• Diversify Funding Sources: Given the low share capital, explore options such as shareholder loans, external financing, or equity injections to bolster liquidity and support growth investments.

• Monitor Working Capital Regularly: Maintain vigilant oversight on the balance of current assets and liabilities to avoid liquidity crunches, especially with fluctuating debtor levels.

• Consider Employee Strategy: If growth is anticipated, plan for hiring employees or formalizing subcontractor agreements to ensure operational stability and compliance with employment regulations.

• Governance Enhancements: Establish transparent financial reporting and internal controls given concentrated ownership, to manage risks and support strategic decisions.

• Prepare for Scaling: As the company grows, plan investments in fixed assets and working capital to avoid operational bottlenecks in manufacturing and service delivery.

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Executive Summary

CHOK BUILDING SOLUTIONS LIMITED shows signs of a strengthening financial position with positive working capital and growing equity, reflecting a recovering and stable business "heartbeat." However, high debtor balances and low cash reserves suggest potential liquidity risks that require careful management. By improving cash flow dynamics and maintaining governance discipline, the company can sustain its growth trajectory and financial wellness.