DKM90 UTILITIES LIMITED

Executive Summary

DKM90 Utilities Limited is a young company showing initial financial stability but recent signs of liquidity strain with a significant drop in cash and working capital. Immediate focus on cash flow management and operational efficiency is critical to avoid further financial distress and to support sustainable growth. The company remains solvent but must act prudently to strengthen its financial health.

DKM90 UTILITIES LIMITED - Analysis Report

Company Number: SC755854

Analysis Date: 2025-07-29 12:33 UTC

Financial Health Assessment Report for DKM90 UTILITIES LIMITED

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1. Financial Health Score: C

Explanation:
DKM90 Utilities Limited shows signs of financial stability but with some emerging concerns. The company has positive net current assets and shareholders' funds, indicating it is solvent and able to meet short-term obligations. However, a significant reduction in current assets and net current assets in the latest year signals potential liquidity stress. The company is young, with only two full years of financial history, which limits trend analysis and confidence in long-term viability.

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2. Key Vital Signs

Metric	2024 (£)	2025 (£)	Interpretation
Current Assets	22,588	2,634	Sharp decline from prior year—possible cash depletion or asset liquidation.
Cash at Bank	16,887	2,634	Major drop in liquid cash—symptom of cash flow tightening.
Debtors	5,701	0	Debtors fully collected or written off; affects working capital.
Current Liabilities	11,017	2,047	Decreased liabilities—positive sign but may reflect reduced business activity.
Net Current Assets	11,571	587	Drastic fall—working capital severely constrained, indicating liquidity stress.
Shareholders' Funds	11,858	724	Reduction indicates erosion of retained earnings or accumulated losses.
Fixed Assets (Net Book Value)	287	137	Small asset base consistent with a micro business; slight depreciation.

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3. Diagnosis

Liquidity and Cash Flow:
The “healthy cash flow” observed in 2024, evidenced by strong cash reserves and positive net current assets, has weakened significantly by January 2025. The company’s cash holdings dropped by over 80%, and net current assets shrank to a minimal buffer of £587, signaling “symptoms of distress” in liquidity management. This could suggest increased cash burn, delayed receivables collection in prior years now resolved, or a decline in new business inflows.

Solvency:
Despite the shrinkage in assets, the company remains solvent with positive shareholders’ funds (£724). This indicates the company’s assets still exceed liabilities, but the margin is thin. The erosion of reserves may point to losses or owner withdrawals.

Operational Activity:
The absence of debtors in 2025 may imply either faster collection cycles or a drop in sales. Reduced current liabilities suggest the company is managing payables prudently, but may also reflect a scaling back of operations.

Business Lifecycle Stage:
Being a very young company (incorporated in January 2023), DKM90 Utilities is likely in the startup or early growth phase, where cash flow volatility is common. The small asset base and single director reinforce the profile of a micro business.

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4. Recommendations

1. Strengthen Cash Flow Management:

   • Implement stricter cash flow forecasting and budgeting to prevent liquidity shortages.
   • Ensure timely invoicing and collections to maintain a healthy inflow of cash.

2. Review Business Operations:

   • Investigate the cause of drastic asset depletion and address any underlying issues such as declining sales or increased expenses.
   • Explore opportunities to increase revenue or reduce unnecessary costs.

3. Consider Financing Options:

   • If cash flow strain persists, consider short-term financing or working capital loans to buffer liquidity gaps.
   • Engage with professional advisers for potential grant or support schemes available to start-ups in Scotland.

4. Monitor Financial Health Regularly:

   • Conduct periodic financial reviews to detect early “symptoms” of financial stress.
   • Maintain accurate and up-to-date accounting records to support decision-making.

5. Strategic Planning:

   • Develop a medium-term business plan focusing on sustainable growth and profitability.
   • Assess risks related to market conditions and prepare contingency plans.

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Medical Analogy Summary:
DKM90 Utilities Limited currently exhibits a "weak pulse" in its liquidity, with a sharp decline in cash and working capital posing a warning sign. While the company remains "solvent," the financial "vital signs" suggest it is in a fragile state akin to a patient recovering from an illness but still vulnerable to relapse without careful management.

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