Company Number: 13122642

Analysis Date: 2025-07-20 11:43 UTC

Financial Health Assessment of Cleveland Construction Ltd (FY ending 31 Jan 2024)

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1. Financial Health Score: B

Explanation:
Cleveland Construction Ltd shows solid improvement in its financial position over the past four years. Key liquidity and solvency indicators have strengthened, reflecting a recovering and stabilizing business. However, some caution remains due to relatively high current liabilities and a modest asset base typical for a micro-entity. The company is in good health but should continue monitoring working capital closely to maintain this positive trajectory.

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2. Key Vital Signs

Metric	2024 Value	Interpretation
Fixed Assets	£34,651	Moderate investment in long-term assets; slight reduction from prior year suggests asset disposal or depreciation. Healthy for micro business.
Current Assets	£356,921	Strong increase (+65%) indicates improved cash, receivables, or inventory levels—vital for day-to-day operations.
Current Liabilities	£314,532	Significant short-term obligations but manageable given current assets; needs monitoring to avoid liquidity strains.
Net Current Assets (Working Capital)	£42,389	Positive and increased from prior year (£7,813); indicates improved liquidity and ability to cover short-term debts.
Net Assets (Equity)	£63,900	Increased steadily from £25,287 in 2021; signals retained earnings and healthier financial stability.
Share Capital	£100	Nominal, typical for micro-entities; equity growth mainly from retained profits.
Employee Count	3 (2024)	Small team, consistent with micro-entity status, allowing lean operations.

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3. Diagnosis

Financial Vital Signs: Cleveland Construction Ltd exhibits the "heartbeat" of a small but growing construction business. The company’s working capital has improved significantly, showing a "healthy cash flow pulse" necessary for sustaining operations and meeting short-term obligations. The steady increase in net assets points to "strengthening bones" of the business — accumulated profits and growing equity provide a buffer against financial shocks.

Symptoms of Distress:

• Current liabilities are relatively high compared to fixed assets, indicating reliance on short-term financing or trade credit; this could be a "stress symptom" if not managed carefully.
• The slight reduction in fixed assets could reflect aging equipment or asset disposals, which might affect operational capacity if not replaced timely.

Underlying Health:
The company is not in distress; rather, it is in a recovery and growth phase, likely investing in working capital to support increased activity. The small employee base and micro-entity classification suggest a lean operation with controlled costs.

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4. Recommendations

• Maintain and Monitor Working Capital: Continue to build and preserve net current assets to ensure the company can comfortably meet short-term liabilities without liquidity strain. Implement regular cash flow forecasting.
• Asset Management: Review fixed asset needs to ensure operational efficiency; plan for asset replacement or upgrades to avoid operational disruption.
• Debt Management: Aim to reduce short-term liabilities where possible or renegotiate terms to improve cash flow stability. Consider long-term financing options if expansion is planned.
• Profit Retention: Reinvest retained earnings to strengthen equity base and support sustainable growth.
• Operational Efficiency: With a small team, focus on productivity and cost control to maintain profitability margins.
• Compliance and Filing: Maintain timely filing of accounts and confirmation statements to avoid penalties and uphold company reputation.

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