D&M SCAFFOLDING SCOTLAND LTD

Executive Summary

D&M SCAFFOLDING SCOTLAND LTD shows early symptoms of financial distress with negative net assets and severe working capital deficits. Immediate focus on liquidity improvement, cost management, and capital strengthening is essential to stabilize and improve its financial health.

D&M SCAFFOLDING SCOTLAND LTD - Analysis Report

Company Number: SC760030

Analysis Date: 2025-07-29 15:23 UTC

Financial Health Assessment: D&M SCAFFOLDING SCOTLAND LTD

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1. Financial Health Score: D (Distressed)

Explanation:
The company exhibits significant financial stress, primarily indicated by a substantial negative net asset position and a heavy current liabilities burden exceeding current assets by a wide margin. This signals poor liquidity and solvency challenges typical of a business struggling to meet short-term obligations.

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2. Key Vital Signs

Metric	Value (£)	Interpretation
Fixed Assets	11,370	Modest investment in long-term assets
Current Assets	29,476	Limited liquid and short-term assets
Current Liabilities	104,492	High short-term debts to be paid within a year
Net Current Assets	-75,016	Severe working capital deficit ("symptom of distress")
Total Assets Less Current Liabilities	-63,646	Negative overall asset coverage after liabilities
Net Assets (Shareholders' Funds)	-63,646	Equity is negative, indicating insolvency risk

Interpretation:

• Negative Net Current Assets (working capital) is a critical red flag indicating the company may not have sufficient liquid resources to cover its immediate debts, akin to a patient with low blood pressure struggling to circulate vital nutrients.
• Negative Net Assets reflects that liabilities surpass total assets, suggesting a balance sheet "imbalance" that could threaten business continuity if unaddressed.
• The company is newly incorporated (Feb 2023), so startup losses and initial investment deficits may explain some of the distress, but the current position is precarious.

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3. Diagnosis

D&M SCAFFOLDING SCOTLAND LTD is in the early stage of financial distress. The financial "symptoms" (negative working capital and net assets) suggest liquidity problems and potential solvency issues if the business does not improve cash inflows or reduce liabilities. The company's dependence on short-term creditors is high, and without healthy cash flow or external funding, it risks being unable to meet obligations as they fall due.

Being a micro-entity with only one employee (the director), the business is likely still establishing its market presence and client base. The negative equity is common in startups but must be monitored carefully.

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4. Recommendations

To restore financial wellness, the following steps are advised:

• Liquidity Management:
  Prioritize improving cash flow by accelerating debtor collections, negotiating extended payment terms with suppliers, or securing short-term financing to reduce working capital strain.

• Cost Control:
  Scrutinize operational expenses to conserve cash. Since the company currently has minimal fixed assets and employees, focus on efficient use of resources.

• Capital Injection:
  Consider an equity injection by the sole shareholder or external investors to bolster net assets and strengthen the balance sheet "immune system."

• Debt Restructuring:
  Engage with creditors to restructure or refinance current liabilities to reduce immediate pressure and avoid default.

• Business Development:
  Accelerate sales and contracts to generate steady revenue streams that can stabilize income and enable debt repayment.

• Regular Monitoring:
  Implement monthly financial reviews to detect early warning signs ("symptoms") of distress and adjust strategies promptly.

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Executive Summary

D&M SCAFFOLDING SCOTLAND LTD currently faces significant financial challenges, marked by negative net assets and a large working capital deficit that threaten liquidity and solvency. As a newly formed micro-entity, these issues are common but require immediate action through improved cash flow management, cost control, and potential capital injections to restore financial health. Without intervention, the company risks escalating distress that could impair its operational viability.