DAWLISH ELECTRICAL SERVICES LTD

Executive Summary

Dawlish Electrical Services Ltd is currently facing significant liquidity and working capital challenges, with cash reserves nearly depleted and equity substantially eroded. These financial symptoms indicate distress that requires urgent cash flow management, cost control, and potential capital restructuring to stabilize the company’s financial health. Immediate action is recommended to prevent further deterioration and ensure ongoing operational viability.

DAWLISH ELECTRICAL SERVICES LTD - Analysis Report

Company Number: 14356476

Analysis Date: 2025-07-29 20:16 UTC

Financial Health Assessment for Dawlish Electrical Services Ltd

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1. Financial Health Score: D

Explanation:
The company's financial health score is graded D, indicating distress signals that require immediate attention. While the company remains active and solvent on paper, the sharp decline in liquidity and working capital reflects symptoms of financial strain and potential cash flow issues. This grade signals caution, akin to a patient with warning signs needing urgent care to prevent deterioration.

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2. Key Vital Signs

Metric	2024 (£)	2023 (£)	Interpretation
Fixed Assets	1,400	1,893	Slightly reduced asset base; depreciation exceeds new investment, a sign of aging assets.
Current Assets	1,683	9,620	Significant drop, mainly due to cash depletion from £9,620 to £6, indicating liquidity crisis.
Debtors	1,677	0	New receivables now present; possible delay in customer payments affecting cash flow.
Cash	6	9,620	Severe cash shortage; "healthy cash flow" is absent, risking inability to meet obligations.
Current Liabilities	2,938	4,652	Reduced liabilities but still exceeds current assets, causing negative working capital.
Net Current Assets	-1,255	4,968	Negative working capital—symptom of liquidity distress and potential short-term solvency issues.
Net Assets (Equity)	145	6,861	Significant erosion of equity capital, resembling a patient losing vital reserves.
Shareholders’ Funds	145	6,761	Reflects diminished retained earnings and capital base over one year.

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3. Diagnosis

Dawlish Electrical Services Ltd exhibits clear symptoms of financial distress, primarily due to a drastic deterioration in liquidity and working capital over the past year:

• Liquidity Crisis: Cash reserves have nearly vanished, dropping from £9,620 to just £6, indicating an inability to generate or retain cash from operations or financing. This is a critical "vital sign" reflecting potential cash flow blockage.

• Working Capital Deficit: The company now has a negative net current asset position (-£1,255), meaning current liabilities exceed current assets. This is akin to a patient whose short-term resources are insufficient to cover immediate needs, increasing the risk of insolvency.

• Erosion of Equity: Shareholders’ funds and net assets have drastically decreased, signaling that the company has consumed its accumulated reserves, possibly through operating losses or asset impairments.

• Receivables Build-up: The emergence of trade debtors (£1,268) and other debtors (£409) suggests the company is extending credit to customers but may be slow in collecting cash, exacerbating liquidity woes.

• Asset Depreciation: Fixed assets have declined due to depreciation outpacing additions, which may impact future operational capacity if not reinvested.

The company appears to be in the early stages of financial sickness, with liquidity problems as the primary symptom. Without corrective measures, these symptoms could lead to more severe conditions such as insolvency or forced restructuring.

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4. Recommendations

To restore financial wellness, Dawlish Electrical Services Ltd should consider the following "treatment plan":

• Immediate Cash Flow Management:

  • Accelerate collection of outstanding debts to improve cash inflows.
  • Negotiate extended payment terms with suppliers and creditors to ease short-term liabilities.
  • Consider short-term financing options like overdrafts or invoice factoring to bridge liquidity gaps.

• Cost Control and Expense Review:

  • Conduct a thorough review of operating expenses to cut non-essential costs.
  • Optimize inventory and procurement to reduce cash tied up in stock and payables.

• Equity and Capital Restructuring:

  • Evaluate the possibility of capital injection from shareholders or external investors to replenish equity.
  • Explore options for refinancing or restructuring existing debts to improve solvency ratios.

• Asset Management:

  • Assess fixed asset utilization and consider disposal of underperforming assets to generate cash.
  • Plan for timely reinvestment in essential assets to sustain operational capability.

• Financial Monitoring and Reporting:

  • Implement rigorous cash flow forecasting and regular financial health check-ups to detect early warning signs.
  • Engage with professional advisors to help navigate recovery strategies and compliance with Companies House requirements.

Without these interventions, the company risks worsening liquidity problems that could impair its ability to operate effectively.

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