DANCY BUILDING CONTRACTORS LIMITED

Executive Summary

DANCY BUILDING CONTRACTORS LIMITED demonstrates a promising start with profitable operations and a positive equity base after its first year. However, the company exhibits tight liquidity with current liabilities exceeding current assets, a common challenge in the construction sector. Strategic focus on improving working capital, managing debt prudently, and building cash reserves will be essential to sustain growth and financial health.

DANCY BUILDING CONTRACTORS LIMITED - Analysis Report

Company Number: 15432692

Analysis Date: 2025-07-20 16:19 UTC

Financial Health Assessment for DANCY BUILDING CONTRACTORS LIMITED
(Period ending 31 January 2025)

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1. Financial Health Score: B-

Explanation:
As a newly incorporated micro-entity operating for just over one year, the company shows promising profitability and positive net assets, indicating a fundamentally sound financial structure. However, the relatively modest net asset base and current liabilities exceeding current assets signal early-stage liquidity constraints that warrant careful management. The "B-" grade reflects a healthy start with some cautionary signs typical for a young construction business.

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2. Key Vital Signs

Metric	Value (£)	Interpretation
Turnover	132,324	Modest but respectable revenue for a first-year micro business in construction.
Profit for the Period	20,177	Positive net profit (~15% margin), showing effective cost control and operational viability.
Fixed Assets	22,668	Investment in long-term assets (likely equipment/structures), supporting business operations.
Current Assets (incl. cash)	11,236	Relatively low liquid assets which may constrain short-term operational flexibility.
Current Liabilities	14,837	Exceed current assets—potential symptom of working capital strain; requires monitoring.
Net Current Assets	2,099	Positive but thin working capital buffer; indicates tight short-term liquidity.
Creditors (long term)	19,575	Significant long-term obligations, indicating financing or deferred payments needing management.
Net Assets (Equity)	4,493	Positive equity base but low, reflecting early stage capitalisation and retained earnings.
Staff	1	Very small workforce consistent with micro entity status and founder-led structure.

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3. Diagnosis: What the Financial Data Reveals About Business Health

• Healthy Cash Flow but Tight Liquidity: The company has generated a profit of £20,177 in its first year, a positive sign of operational health and ability to cover costs. However, current liabilities exceed current assets, indicating possible "symptoms" of short-term liquidity stress. This is common in construction businesses with payment cycles and supplier credit.

• Early-stage Capital Structure: With net assets of £4,493, the business has established a modest equity foundation funded primarily by the sole shareholder, Mr. George Henry Dancy. The presence of notable long-term creditors (£19,575) suggests reliance on external financing or supplier credit, which must be managed carefully to avoid solvency risks.

• Concentrated Control and Management: 100% ownership and directorship by Mr. Dancy offers agility but also concentration risk if the business faces operational challenges. The single-employee model reflects a lean operation but may limit scalability and resilience.

• Asset Base Supports Operations: Fixed assets of £22,668 indicate investment in essential equipment or structures, underpinning service delivery capability in building construction.

• No Overdue Filings & Compliance: Timely accounts and confirmation statement filings suggest good governance and regulatory compliance, a positive sign of corporate discipline.

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4. Recommendations: Specific Actions to Improve Financial Wellness

• Strengthen Working Capital Management:
  Focus on improving the cash conversion cycle by negotiating better payment terms with suppliers and clients to reduce the gap between cash outflows and inflows. Consider short-term financing options or overdraft facilities to buffer liquidity fluctuations.

• Build Cash Reserves:
  Retain a portion of profits to increase current assets and create a more robust liquidity cushion. This "healthy cash flow" practice is critical for weathering the typical ups and downs in construction projects.

• Review Long-Term Debt Structure:
  Evaluate the nature and terms of the £19,575 long-term liabilities to ensure manageable repayment schedules and avoid refinancing risks.

• Plan for Controlled Growth:
  Given the small scale, consider gradual expansion of workforce or subcontractors to increase capacity, but balance this with cash flow and profitability targets to maintain financial stability.

• Maintain Rigorous Financial Monitoring:
  Regularly track key financial indicators such as liquidity ratios (current ratio, quick ratio), profitability margins, and debtor days to detect early warning signs of financial distress.

• Leverage Industry Support and Grants:
  Explore available government or industry-specific grants and support schemes, especially relevant for construction SMEs, to augment capital or reduce operational costs.

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