DNQ SCAFFOLDING LIMITED

Executive Summary

DNQ SCAFFOLDING LIMITED exhibits a stable and solvent financial position consistent with a micro-entity, but a notable decline in current assets signals tightening liquidity that requires attention. Maintaining strong cash flow management and building working capital reserves will be key to sustaining financial health. With prudent monitoring and minor operational adjustments, the company can maintain a healthy financial outlook.

DNQ SCAFFOLDING LIMITED - Analysis Report

Company Number: 12806585

Analysis Date: 2025-07-29 20:20 UTC

Financial Health Assessment Report for DNQ SCAFFOLDING LIMITED

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1. Financial Health Score: B-

Explanation:
This company shows a stable but constrained financial position typical of a micro-entity in the scaffolding sector. Fixed assets are consistent and net assets remain positive, indicating no immediate distress. However, a significant reduction in current assets and net current assets between 2021 and 2022 signals potential liquidity tightening — a symptom that should be monitored closely. The company is not showing signs of insolvency, but its relatively low working capital and cash balance suggest a cautious outlook.

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2. Key Vital Signs (Core Financial Metrics)

Metric	2022 (£)	2021 (£)	Interpretation
Fixed Assets	18,150	15,710	Small but consistent investment in long-term assets.
Current Assets	801	4,985	Sharp decline, indicating reduced liquid resources.
Current Liabilities	170	1,850	Significant decrease, reducing short-term debt obligations.
Net Current Assets	631	3,135	Decreased working capital signals tighter liquidity.
Total Net Assets	18,783	18,847	Stable equity base, indicating no erosion of shareholder value.
Share Capital	2	2	Minimal share capital, typical for micro-entities.
Average Number of Employees	2	2	Small workforce consistent with micro company classification.

Interpretation of Vital Signs:

• The steady fixed assets imply the company has maintained its operational capacity.
• The drop in current assets coupled with a reduction in current liabilities suggests less cash or receivables but also fewer short-term payables.
• The positive net current assets indicate the company can cover its short-term debts, but the decline from £3,135 to £631 is a cautionary symptom of tightening cash flow.
• The stable net assets and shareholders funds reflect a healthy balance sheet without accumulated losses.
• The company operates with a very lean capital structure and a small team, which is typical for a micro business but limits scalability.

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3. Diagnosis (What the Financial Data Reveals)

DNQ SCAFFOLDING LIMITED currently exhibits a stable but constrained financial condition. The company’s balance sheet shows no signs of distress or insolvency, which is a positive "healthy heart" sign. However, the "symptoms" of reduced current assets and net current assets reflect a reduction in readily available cash or short-term receivables, which could hamper day-to-day operations if not addressed.

The small scale of operations and minimal share capital is typical of a micro-entity but means the company has limited financial buffer or access to capital markets. The decrease in current liabilities suggests management has reduced short-term debts, possibly to avoid liquidity risk, but this also coincides with lower current assets, indicating a leaner working capital cycle.

The company’s financial health resembles a patient who is stable but requires close monitoring of liquidity and cash flow to avoid potential strain under adverse conditions.

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4. Recommendations (Specific Actions to Improve Financial Wellness)

• Improve Cash Flow Management:
  Monitor accounts receivable closely to ensure timely collections. Consider negotiating better payment terms with customers and suppliers to maintain a healthier cash flow buffer.

• Build Working Capital Reserves:
  Aim to increase current assets by retaining more cash or converting receivables quickly. This will strengthen the net current assets and provide a cushion against unexpected expenses.

• Review Cost Structure and Efficiency:
  Given the small scale, ensure that overheads and operating costs are tightly controlled. Look for efficiency improvements in operations to preserve margins.

• Plan for Capital Injection if Needed:
  Although the company is solvent, a small injection of capital (via shareholder loans or equity) could provide additional financial flexibility.

• Regular Financial Monitoring:
  Establish monthly or quarterly financial reviews to detect liquidity issues early. Early intervention can prevent symptoms from escalating into financial distress.

• Consider Growth or Diversification:
  Explore opportunities for modest growth or diversification to improve revenue streams and reduce business risk concentrated in scaffolding.

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