CUTTING EDGE (LATCHINGDON) LIMITED

Executive Summary

Cutting Edge (Latchingdon) Limited exhibits a generally healthy financial condition with improving liquidity and growing equity, supported by strong director backing. Key challenges include managing high debtor balances and ensuring efficient use of fixed assets to maintain operational vitality. With focused actions on cash flow management and asset optimization, the company is well-positioned for a stable financial future.

CUTTING EDGE (LATCHINGDON) LIMITED - Analysis Report

Company Number: 13111452

Analysis Date: 2025-07-19 12:03 UTC

Financial Health Assessment: CUTTING EDGE (LATCHINGDON) LIMITED

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1. Financial Health Score: B

The company demonstrates solid financial improvement over recent years, with increasing net assets and positive working capital. The score "B" reflects a generally healthy financial state with good liquidity and equity growth, though some caution is warranted around debtor concentration and fixed asset management.

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2. Key Vital Signs

Metric	2025 (£)	Interpretation
Current Assets	146,643	Healthy short-term assets, indicating sufficient resources to cover immediate obligations.
Cash	37,094	Moderate cash reserves; some reliance on receivables for liquidity.
Debtors	96,697	High level of trade and other receivables; potential liquidity risk if collection is delayed.
Current Liabilities	96,699	Current liabilities nearly equal to current assets but net current assets positive (+49,944).
Net Current Assets (Working Capital)	49,944	Positive working capital, a vital sign of operational liquidity health.
Fixed Assets (Tangible)	146,697	Significant investment in plant, machinery, and equipment, indicating capital intensity.
Net Assets (Equity)	137,283	Strong equity base, showing accumulated profits and retained earnings, indicating solvency.
Share Capital	100	Minimal share capital, typical for a small private company.
Director Loan Account	Director owing company £44,452	Positive indicator of director support and internal financing.
Provisions	27,872	Moderate provisions, should be monitored for adequacy and impact on liquidity.

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3. Diagnosis: Financial Health Analysis

• Liquidity ("Healthy Cash Flow"): The company shows a positive net current asset position of £49,944 in 2025, an improvement from £31,071 in 2024 and a considerable recovery from a negative position in 2022. This suggests the business has successfully managed to restore its short-term liquidity "pulse," enabling it to pay its immediate debts without distress.

• Receivables ("Symptoms of Collection Risk"): Debtors almost double cash on hand, standing at £96,697. This high level of accounts receivable could signal potential delays in cash inflows, which may strain liquidity if not well managed. Monitoring debtor aging and improving collections would be prudent.

• Solvency ("Robust Equity Structure"): With net assets rising to £137,283, the company appears solvent and financially stable, reflecting retained earnings growth and prudent management of liabilities. This is akin to a strong "immune system" protecting against financial shocks.

• Capital Intensity ("Investment in Fixed Assets"): Tangible assets at £146,697 indicate significant capital tied up in equipment and machinery. This is consistent with the company's engineering activity but requires effective asset utilization to avoid "stagnant capital," which can reduce profitability.

• Debt and Financing ("Director Support"): The director loan account shows the director lending £44,452 to the company, reflecting strong internal financial backing. External debts, including finance leases, appear manageable but should be monitored for repayment schedules.

• Provisions and Contingencies: Provisions reduced slightly from £31,096 to £27,872, indicating some risks or future obligations are accounted for. While not alarming, this requires ongoing evaluation to ensure no hidden liabilities impair financial health.

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4. Recommendations: Steps to Improve Financial Wellness

• Enhance Debtor Management: Accelerate collection processes and reduce debtor days to mitigate liquidity risks. Consider stricter credit control policies or invoice financing options to quicken cash inflows.

• Cash Reserves Optimization: Although cash levels are moderate, improving cash reserves would provide a buffer for unforeseen expenses and improve operational flexibility.

• Fixed Asset Review: Conduct an asset utilization review to ensure machinery and equipment are efficiently employed, avoiding unnecessary capital lock-up. Consider disposals or upgrades if assets become obsolete.

• Debt Management Strategy: Maintain regular monitoring and clear repayment plans for finance lease obligations to avoid cash flow stress.

• Provision Monitoring: Review provisions regularly to ensure they reflect current risks, avoiding surprises that could deplete working capital.

• Financial Planning and Forecasting: Implement robust budgeting and forecasting tools to anticipate cash flow gaps and financial needs proactively.

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