Company Number: 13516992

Analysis Date: 2025-07-20 12:31 UTC

Financial Health Assessment for DEKKOR LTD as at 31 August 2024

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1. Financial Health Score: B

Explanation:
DEKKOR Ltd demonstrates generally sound financial health with strong liquidity and improving net asset position. The company shows healthy working capital and maintained positive shareholder equity, indicating stability and capacity to meet short-term obligations comfortably. However, the significant increase in long-term creditors (debt) warrants attention as it elevates financial risk and may impact future flexibility.

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2. Key Vital Signs

Metric	Value (2024)	Interpretation
Current Assets	£1,005,701	Strong short-term resources, nearly doubled from 2023, mainly driven by increased debtors and cash.
Cash at Bank	£173,776	Adequate liquidity; cash reserves have nearly tripled, a very positive sign of cash flow health.
Debtors	£708,420	Substantial increase (130% from prior year), indicating more sales on credit; requires monitoring for collection efficiency.
Current Liabilities	£346,985	Stable compared to prior year; manageable given current asset levels.
Net Current Assets (Working Capital)	£658,716	Healthy positive working capital, indicating the company can cover short-term debts with short-term assets.
Long-term Creditors	£706,149	Significant increase from £278,244 in 2023; points to increased borrowing or deferred payments, which increases leverage and financial risk.
Net Assets (Equity)	£297,477	Growing equity base, showing retained profits and financial strength.
Profit & Loss Reserve	£297,277	Indicates accumulated retained earnings, a sign of profitability over time.
Tangible Fixed Assets (Net)	£344,910	Stable investment in plant and machinery; depreciation charge is substantial but expected in manufacturing.
Employee Count	30 (2024) vs 29 (2023)	Stable workforce size consistent with operational scale.

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3. Diagnosis: Financial "Health Check"

• Liquidity (Cash Flow Health):
  The company enjoys a "healthy pulse" with strong cash reserves and a substantial increase in current assets, particularly debtors. This suggests successful sales growth but also a reliance on credit extended to customers. The company appears well-positioned to meet its immediate obligations, reflected in a comfortable working capital cushion.

• Solvency (Long-Term Stability):
  The marked rise in long-term creditors is a "symptom of financial stress" that could indicate increased borrowing or deferred liabilities. While not yet alarming, this trend requires careful monitoring as it could constrain future financial flexibility and increase interest costs.

• Profitability and Retained Earnings:
  The increase in shareholders' funds and profit and loss reserves reflects profitable operations and capital retention. However, the absence of detailed profit and loss data limits the ability to assess margins and operational efficiency fully.

• Asset Management:
  Tangible fixed asset levels are consistent, indicating ongoing investment in manufacturing capacity without overextension.

• Credit Risk:
  The significant rise in trade debtors warrants attention. If collections slow, this could develop into a liquidity bottleneck. Monitoring debtor aging and credit controls is advisable.

• Overall Condition:
  DEKKOR Ltd is in a "stable but watchful" condition. The company is growing and maintaining financial health but must manage rising debt and credit sales carefully to avoid future distress.

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4. Recommendations: Treatment Plan for Financial Wellness

1. Strengthen Credit Control:
   Implement or enhance debtor monitoring and collection strategies to ensure that the increased trade receivables convert into timely cash inflows. This will prevent cash flow tightening.

2. Debt Management Strategy:
   Review the terms and structure of long-term creditors. Consider refinancing options, negotiating better terms, or prioritizing debt reduction to improve financial flexibility and reduce interest burden.

3. Cash Flow Forecasting:
   Develop rolling cash flow forecasts to anticipate liquidity needs and manage working capital proactively, especially given growing credit sales and liabilities.

4. Profitability Analysis:
   Conduct a detailed review of margins and operational costs to ensure profitability sustains and supports the growing asset base and liabilities.

5. Risk Monitoring:
   Regularly review financial ratios such as the current ratio, gearing ratio, and debtor days to detect early warning signs of distress.

6. Strategic Investment Planning:
   Maintain prudent capital expenditure aligned with business growth to avoid over-leverage while supporting manufacturing capacity.

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