DEBSON & CO LIMITED

Executive Summary

DEBSON & CO LIMITED exhibits solid financial health with strong liquidity and equity. While goodwill amortisation and rising debtors present mild concerns, the overall financial condition remains stable. Focusing on receivables management and profitability enhancement will support sustained financial wellness.

DEBSON & CO LIMITED - Analysis Report

Company Number: 12456331

Analysis Date: 2025-07-20 11:35 UTC

Financial Health Assessment of DEBSON & CO LIMITED

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1. Financial Health Score: B+

Explanation:
DEBSON & CO LIMITED demonstrates sound financial stability with strong net assets and positive working capital, indicating a generally healthy financial condition. However, a gradual decline in net assets and amortisation of significant intangible assets (goodwill) are points to monitor closely. The company’s financial "vital signs" are stable but not without mild stress signals that warrant attention.

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2. Key Vital Signs

Metric	2023 Value (£)	Interpretation
Net Assets	1,258,919	Healthy equity base, indicating sound financial foundation. Slight decrease from previous year.
Net Current Assets (Working Capital)	576,864	Strong liquidity position, sufficient to cover short-term liabilities comfortably.
Cash Position	184,143	Healthy cash reserves provide operational flexibility and buffer for unexpected expenses.
Fixed Assets	859,975	Significant investment in assets, mostly intangible (goodwill), requiring monitoring for impairment.
Share Capital	1,070,100	Majority of equity is share capital; shows strong shareholder commitment.
Debtors	634,811	High receivables relative to cash; may indicate extended credit terms or collection risk.
Current Liabilities	242,090	Manageable short-term debts relative to assets.
Amortisation of Goodwill	£105,000 (2023)	Large annual amortisation impacts profit; goodwill is an intangible "asset" that can mask underlying earning power.
Employee Count	8	Small to medium-sized workforce consistent with company category and industry.

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3. Diagnosis: Financial Health Overview

• Liquidity & Cash Flow:
  The company exhibits a "healthy cash flow" symptom with strong net current assets and increasing cash reserves, enabling it to meet short-term obligations without strain.

• Solvency & Capital Structure:
  A strong net asset position and shareholders’ funds well above liabilities indicate good solvency. The slight decline in net assets from 2022 to 2023 is not alarming but suggests a need to monitor profitability and asset values, especially intangible assets.

• Asset Quality:
  The company’s fixed assets are predominantly goodwill (£735,000), which is amortised over ten years. This intangible asset is a potential "pressure point" as its value depends on future earnings and market conditions. The amortisation charge reduces reported profits, indicating a "symptom of financial wear."

• Receivables Management:
  The high level of debtors relative to cash could indicate elongated credit terms or potential collection delays, which may stress liquidity if not managed carefully.

• Profitability Insight:
  While full profit and loss data is not disclosed, amortisation of goodwill and director loans settled within nine months suggest controlled operational costs and effective management of internal financing.

• Governance and Control:
  The company is managed by experienced directors with accounting expertise, which is a positive indicator for financial oversight and compliance.

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4. Recommendations: Path to Improved Financial Wellness

1. Enhance Receivables Collection:
   Implement stricter credit control policies to reduce debtor days and convert receivables into cash more quickly, alleviating pressure on working capital.

2. Monitor Goodwill and Intangible Assets:
   Conduct regular impairment reviews to ensure goodwill reflects economic reality. Consider strategies to enhance profitability to justify goodwill value or reduce reliance on intangible assets.

3. Profitability Focus:
   Since goodwill amortisation reduces reported profits, focus on improving operational efficiency and revenue growth to bolster retained earnings and shareholder value.

4. Cash Flow Forecasting:
   Maintain forward-looking cash flow models to anticipate liquidity needs, especially given the company’s investment in fixed assets and loans to directors.

5. Consider Capital Structure Optimization:
   Review equity and debt mix to ensure capital costs are minimized and flexibility is maximized, potentially exploring external financing if growth opportunities arise.

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Medical Analogy Summary

The company’s financial system shows mostly "healthy vital signs" with strong liquidity and solvency. However, the "symptom" of declining net assets and significant amortisation expense is a "chronic condition" that requires ongoing monitoring and management. Prompt actions on receivables and profitability can prevent future "financial distress" and maintain robust "corporate health."

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