COOL RUNNING TRAILERS LTD

Executive Summary

COOL RUNNING TRAILERS LTD demonstrates strong growth through fixed asset investments but faces immediate liquidity challenges indicated by negative net current assets. While the company remains solvent with increased equity, managing short-term cash flow and creditor obligations is critical to sustaining operations and supporting ongoing expansion. Focused working capital management and cash flow monitoring will be key to improving financial health.

COOL RUNNING TRAILERS LTD - Analysis Report

Company Number: 13673192

Analysis Date: 2025-07-20 16:27 UTC

Financial Health Assessment of COOL RUNNING TRAILERS LTD

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1. Financial Health Score: C

Explanation:
The company shows signs of growth and asset acquisition but is currently experiencing liquidity stress, reflected in a negative net current asset position. While shareholders’ funds have improved, the company faces short-term cash flow challenges that require immediate attention to avoid financial distress.

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2. Key Vital Signs

Metric	2023 (£)	2022 (£)	Interpretation
Current Assets	54,218	14,608	Increased significantly, largely due to cash & debtors
Cash at Bank	31,797	6,157	Healthy growth in cash reserves
Debtors	22,421	8,451	Higher receivables, potential risk if not collected timely
Current Liabilities	92,084	(5,487)	Sharp rise in short-term debts, a warning sign
Net Current Assets	(37,866)	20,095	Negative working capital indicates liquidity strain
Fixed Assets	117,212	10,897	Major investment in tangible assets, shows expansion
Net Assets	79,346	30,992	Equity growth, indicates retained earnings and capital infusion
Shareholders’ Funds	79,346	30,992	Reflects owner's equity, improved but liquidity issue remains

Interpretation:

• The company has invested heavily in fixed assets (trailers and vehicles), showing growth plans and asset expansion.
• However, the current liabilities have surged drastically, surpassing current assets and resulting in negative working capital (net current assets). This is a symptom akin to "short-term distress," meaning the company may struggle to meet its immediate obligations without additional financing or cash inflows.
• Cash holdings have improved, which is a positive sign of liquidity management, but the large creditor balances and loans from directors highlight potential pressure points.
• The increase in debtors (amounts owed by customers) means the company needs to monitor its credit control closely to avoid cash flow bottlenecks.

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3. Diagnosis

Overall Financial Condition:
COOL RUNNING TRAILERS LTD is in a growth phase with significant asset acquisition, indicating strategic investment in capacity or operational capability. However, it exhibits symptoms of liquidity stress due to the imbalance between current assets and liabilities. This "cash flow distress" can impair day-to-day operations if not managed carefully. The company's solvency appears intact as net assets and shareholders’ funds have increased substantially, but the negative net current assets highlight an urgent need for improved short-term financial management.

• The company is solvent but has liquidity issues analogous to a patient with a strong heart but experiencing difficulty in breathing — the long-term outlook is positive if the immediate cash flow issues are resolved.
• The high trade creditors and director loans suggest reliance on external and internal short-term funding, which can be risky if not replaced with sustainable cash flow.

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4. Recommendations

1. Improve Working Capital Management

   • Accelerate debtor collections: Implement stricter credit control and incentivize early payments to convert receivables into cash faster.
   • Negotiate extended payment terms with suppliers to ease pressure on current liabilities.

2. Monitor Cash Flow Closely

   • Prepare detailed cash flow forecasts to anticipate shortfalls and plan accordingly.
   • Maintain or increase cash reserves to buffer against liquidity shocks.

3. Review Financing Structure

   • Explore short-term financing options such as overdrafts or invoice financing to bridge liquidity gaps without relying heavily on director loans.
   • Consider phased asset acquisitions to avoid overextension of capital.

4. Cost Control and Operational Efficiency

   • Assess operating expenses and identify cost-saving measures to improve profitability and cash flow.
   • Evaluate pricing strategies and market demand to ensure asset investments translate into revenue.

5. Regular Financial Health Checks

   • Conduct quarterly financial reviews to monitor liquidity, solvency, and profitability metrics, akin to routine health check-ups.

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