Company Number: 14760434

Analysis Date: 2025-07-19 12:05 UTC

Financial Health Assessment for DGH Electrical Ltd (As of 31 March 2024)

---

1. Financial Health Score: B

Explanation:
DGH Electrical Ltd exhibits a solid foundational financial position for a newly incorporated micro-entity. The company shows healthy net current assets and positive net assets, indicating good short-term liquidity and overall solvency. However, as it is in its first year with limited historical data and a modest asset base, the grade is a B to reflect a generally healthy but still developing financial condition with some caution warranted.

---

2. Key Vital Signs

Metric	Value (£)	Interpretation
Fixed Assets	16,944	Modest investment in long-term assets typical for a new electrical installation business.
Current Assets	49,805	Healthy level of short-term resources including cash and receivables, supporting operational needs.
Current Liabilities	10,846	Manageable short-term debts, indicating no immediate liquidity stress.
Net Current Assets (Working Capital)	39,414	Strong positive working capital, a key sign of healthy cash flow and ability to meet short-term obligations promptly.
Creditors (Long-Term Liabilities)	8,571	Moderate long-term liabilities, not excessive relative to net assets.
Net Assets / Shareholders' Funds	47,787	Positive equity position indicating the company’s assets exceed liabilities, a sign of solvency.
Number of Employees	1	Small workforce consistent with micro-entity classification and startup phase.

---

3. Diagnosis

• Healthy Cash Flow and Liquidity: The company’s net current assets (working capital) are strong, suggesting it has sufficient short-term resources to pay its debts and fund day-to-day operations without distress. This is akin to a patient having a strong pulse and good blood pressure — vital signs of immediate financial health.
• Solvency and Capital Structure: The net assets and positive shareholders' funds indicate the company is solvent with no over-reliance on debt, which reduces financial risk. The presence of some long-term liabilities is typical and manageable but should be monitored to avoid strain as the business grows.
• Early Business Stage Risks: Being less than a year old with only one employee, DGH Electrical Ltd is in a nascent stage. While initial financials are sound, lack of historical profitability or cash flow trends means the company is vulnerable to market or operational shocks. The "symptom" here is limited financial history, requiring careful ongoing monitoring.
• Operational Focus: The company operates in electrical installation and repair, industries that generally require steady cash flow and efficient management of receivables and payables. The financials reflect a good start but will need to scale carefully to maintain health.

---

4. Recommendations

• Maintain Strong Working Capital Management: Continue to monitor and optimise receivables and payables cycles to preserve healthy liquidity. Avoid overextending credit to customers or delaying creditor payments unnecessarily.
• Build Financial Reserves: As profits are generated, reinvest to build cash reserves and reduce reliance on long-term liabilities, strengthening the balance sheet.
• Prepare for Growth: Plan for hiring and capital expenditure carefully to avoid sudden financial strain. Budget conservatively and forecast cash flows regularly.
• Regular Financial Reviews: Conduct quarterly financial health checks to detect any early symptoms of distress such as declining liquidity or rising debt levels.
• Explore Audit and Advisory Support: Although exempt from audit as a micro-entity currently, consider periodic external reviews or advisory support as the business expands to ensure robust financial controls and risk management.

---