Company Number: 12523248

Analysis Date: 2025-07-20 16:18 UTC

Financial Health Assessment Report for DALLOL FORESTRY LIMITED

---

1. Financial Health Score: B

Explanation:
DALLOL FORESTRY LIMITED exhibits a generally stable financial condition with positive net current assets and shareholders’ funds that have grown steadily over recent years. The company maintains a healthy working capital buffer, although the margin is modest given the size of current liabilities. There are no signs of severe distress, but the relatively low cash reserves and reliance on debt to finance operations suggest some caution. Overall, the company’s financial “vital signs” indicate a sound but cautiously managed business.

---

2. Key Vital Signs

Metric	2024 Value	Interpretation
Current Assets	£462,866	Reflects available short-term resources including cash, debtors, and stock; increased from prior year, a positive sign.
Cash	£26,194	Cash on hand is positive but low relative to current liabilities; potential liquidity risk if cash inflows slow.
Debtors	£379,282	High proportion of current assets are trade receivables, indicating potential dependency on collections.
Current Liabilities	£421,749	Obligations due within the year; close to current assets magnitude, indicating tight liquidity.
Net Current Assets (Working Capital)	£41,117	Positive but narrow buffer; company can meet short-term obligations but with limited headroom.
Shareholders’ Funds	£41,117	Equity position has grown from £100 in 2020 to this level, reflecting retained earnings growth and operational profitability.
Turnover & Profitability	Not disclosed	Absence of profit and turnover data limits deeper operational health assessment but balance sheet improvements suggest positive trading results.

---

3. Diagnosis: Financial Health Overview

DALLOL FORESTRY LIMITED’s financial “vital signs” reveal a company with a stable foundation but some symptoms requiring attention:

• Healthy cash flow symptoms: The increase in cash from £0 (2023) to £26,194 (2024) signals improved liquidity management, an encouraging sign akin to a patient recovering strength after illness.
• Symptoms of working capital strain: Current liabilities are nearly as high as current assets, indicating a tight liquidity position. The company must carefully manage receivables collections and stock levels to avoid cash flow stress.
• Reliance on debt financing: The sizeable current liabilities suggest the company depends on short-term credit or trade payables to finance operations. This “symptom” could become critical if creditor terms tighten or sales slow.
• Growth in equity base: The steady increase in shareholders’ funds indicates retained earnings are building, reflecting operational success and prudent management.
• Lack of audited profit and turnover data: The abridged, unaudited accounts limit full financial diagnosis, akin to missing parts of a medical history. However, the available data points to a generally healthy financial state without alarming red flags.

---

4. Recommendations: Steps to Improve Financial Wellness

• Improve cash reserves: Aim to build higher cash balances to provide a liquidity cushion against unexpected expenses or delays in debtor payments. Consider tighter cash flow forecasting and working capital management.
• Accelerate debtor collections: With a large proportion of current assets tied up in debtors, enhancing credit control and collection processes will help convert receivables into cash faster, reducing liquidity risk.
• Manage stock levels prudently: The decrease in stock from £78k to £57k is positive, but continuous monitoring is needed to avoid overstocking or stock obsolescence, which can tie up working capital unnecessarily.
• Monitor and manage short-term liabilities: Engage with creditors to negotiate favourable payment terms where possible, smoothing out cash outflows and preventing liquidity “flare-ups.”
• Prepare fuller financial disclosures: Although the company benefits from audit exemption, providing more comprehensive financial information (including profit and loss statements) will better inform directors and stakeholders for proactive financial management.
• Contingency planning: Given the tight working capital margin, develop contingency plans for potential downturns, including access to credit lines or cost control measures, to ensure the company remains resilient.

---

Summary

DALLOL FORESTRY LIMITED presents a stable and steadily improving financial profile with positive net current assets and growing equity. The company’s financial “pulse” shows no immediate distress but highlights a need to strengthen liquidity through better cash and debtor management. With focused attention on working capital and enhanced financial transparency, the business is well-positioned for sustainable growth.

---