CMD VEHICLES LIMITED

Executive Summary

CMD Vehicles Limited is financially stable but shows early signs of liquidity stress with negative working capital and reliance on director loans. The company has positive net assets but needs to improve cash flow management and strengthen its capital base to ensure long-term financial health. Prompt action on liquidity and funding will improve resilience and support future growth.

CMD VEHICLES LIMITED - Analysis Report

Company Number: 12597641

Analysis Date: 2025-07-29 19:00 UTC

Financial Health Assessment for CMD VEHICLES LIMITED

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1. Financial Health Score: C

Explanation:
CMD Vehicles Limited shows foundational stability with positive net assets but experiences signs of liquidity pressure, as indicated by negative net current assets (working capital) and a reliance on director loans. While not in distress, the company's financial "vital signs" suggest caution and a need for improving cash flow management to avoid symptoms of financial strain.

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2. Key Vital Signs

Metric	Value (2024)	Interpretation (Medical Analogy)
Fixed Assets	£6,954	Modest level of long-term investment; akin to healthy bone structure.
Current Assets	£319,267	Strong short-term resources, like a good blood supply.
Current Liabilities	£328,060	Short-term debts slightly exceed assets; symptom of cash flow tightness.
Net Current Assets (Working Capital)	-£2,464	Negative working capital; "signs of congestion in circulation" (cash flow).
Total Assets Less Current Liabilities	£4,490	Positive but low "overall body strength" (total net assets).
Net Assets (Equity)	£3,490	Positive shareholder funds, indicating survival capability.
Share Capital	£5.00	Minimal capital base; "small immune system" against shocks.
Director Loans	£20,500	Reliance on internal borrowing; "external support" to maintain health.

Additional Notes:

• Average employees increased from 1 to 3, indicating some operational growth.
• Company classed as Micro entity, subject to simplified reporting, limiting detailed financial transparency.
• No overdue filings, indicating regulatory compliance "good hygiene."

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3. Diagnosis

CMD Vehicles Limited is in a delicate but stable financial condition. The company has managed to maintain positive net assets, which is a fundamental sign of financial "life." However, the negative net current assets reveal a "symptom of distress" related to liquidity — the company owes more in the short term than it holds in liquid assets, which can strain day-to-day operations.

The injection of director loans (£20,500) acts like "intravenous support," temporarily sustaining liquidity but not a permanent cure. The low share capital signals limited financial "immune strength," which means the company may struggle to absorb shocks without additional external support.

The modest fixed assets show the company has started investing in its business infrastructure, though this remains small. The increase in employees suggests growing operational activity, which could improve financial health if managed well.

Overall, there are no signs of insolvency or critical failure, but the company exhibits early "warning signs" that require attention to avoid deterioration.

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4. Recommendations

To improve financial wellness and avoid progression to more serious "illness," CMD Vehicles Limited should consider the following actions:

• Improve Liquidity Management:
  Focus on tightening cash flow cycles by accelerating receivables, managing payables carefully, and reducing inventory or other current assets tying up cash. Aim to restore positive net current assets to relieve "circulatory congestion."

• Reduce Reliance on Director Loans:
  While these loans provide short-term relief, they are not sustainable long-term "medications." Seek alternative funding such as a small business loan or equity injection to strengthen the capital base.

• Increase Share Capital and Reserves:
  Enhance the company's financial resilience by increasing equity. This will build a stronger "immune system" to withstand market fluctuations.

• Operational Efficiency:
  Evaluate the cost structure as the business grows headcount and activities. Ensure revenue growth outpaces cost increases to improve profitability and cash generation.

• Regular Financial Monitoring:
  Implement monthly financial reviews focusing on liquidity ratios and cash flow forecasts to detect symptoms early and take corrective action promptly.

• Prepare for Growth:
  The sale of used cars and light motor vehicles sector can be competitive. Invest in marketing and customer service to build a stable revenue base that supports healthier cash flow.

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