Company Number: 13557571

Analysis Date: 2025-07-29 20:17 UTC

Financial Health Assessment of DUNNING AND EVANS LTD

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1. Financial Health Score: B-

Explanation:
DUNNING AND EVANS LTD demonstrates solid foundational financial health for a micro-entity in the construction sector with positive net assets and working capital. However, there are early signs of strain—particularly the increase in long-term liabilities and a reduction in net assets—that temper the overall score. The company remains solvent and operational but should address emerging financial stressors to sustain and improve health.

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2. Key Vital Signs

Metric	2024 Value	Interpretation
Turnover (Latest Known)	£314,719 (2023)	Modest revenue growth indicating stable market activity for a micro business.
Fixed Assets	£57,945	Significant increase from prior years, reflecting investment in long-term assets.
Current Assets	£76,157	Healthy increase, suggesting stronger short-term liquidity.
Current Liabilities	£47,490	Substantial rise compared to previous years, signaling increased short-term obligations.
Net Current Assets	£28,667	Positive working capital but has decreased, indicating potential liquidity tightening.
Long-term Liabilities	£46,494	New and sizeable debt appearing for the first time, raising concern about leverage.
Net Assets (Shareholders’ Funds)	£40,118	Decline from £46,789 prior year, a symptom of emerging financial pressure.
Average Employees	4	Small workforce consistent with micro entity status.

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3. Diagnosis: What the Financial Data Reveals

• Healthy Cash Flow Base: The company’s turnover grew from £160,619 in 2021 to £314,719 in 2023, showing successful market penetration and operational growth. This is akin to a patient gaining strength and resilience.

• Asset Investment ("Capital Infusion"): Fixed assets increased sharply to nearly £58k in 2024 from £6.9k previously, indicating substantial investment in equipment or property. While this can fuel growth, it is crucial that such investments generate returns, or else they become a burden.

• Liquidity Caution ("Short-Term Stress"): Current liabilities nearly tripled to £47,490, eroding net current assets from £39,889 to £28,667. This reduction in working capital signals that the company may face tighter cash flow conditions in the near term.

• Leverage Warning ("Debt Burden"): The appearance of long-term liabilities at £46,494 introduces financial leverage not previously present. This increased debt load could strain the company if revenues or margins do not improve accordingly.

• Equity Decline ("Net Worth Erosion"): Net assets decreased by over £6,600, a symptom that the company may be consuming capital or encountering losses, though exact profit/loss data is not provided.

• Operational Scale: With only about four employees, the company remains a small, focused operation, which can be an advantage in flexibility but also limits scaling without additional resources.

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4. Recommendations: Steps to Improve Financial Wellness

• Monitor and Manage Debt Levels: The new long-term liabilities should be carefully managed. Explore refinancing options or negotiate terms to avoid cash flow strain. Consider whether the asset investments funded by this debt generate sufficient returns.

• Strengthen Working Capital: Improve collection of receivables and manage payables to maintain or increase net current assets. Healthy working capital is like a strong pulse, essential for daily operations.

• Enhance Profitability Tracking: Implement detailed profit and loss monitoring to diagnose whether net asset decline is due to operational losses or one-off costs. Early detection of negative trends allows timely intervention.

• Cash Flow Forecasting: Conduct rolling cash flow forecasts to anticipate liquidity bottlenecks, ensuring the business can meet short-term obligations without distress.

• Cost Control and Efficiency: Review operating expenses and project costs carefully to avoid margin erosion. Small companies often benefit from lean management practices.

• Strategic Growth Planning: Align asset investments with strategic growth plans. Investments should be justified by projected cash inflows and market demand to avoid overextension.

• Maintain Compliance and Reporting: Continue timely filing of accounts and confirmation statements to preserve corporate reputation and avoid penalties.

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Medical Analogy Summary

DUNNING AND EVANS LTD currently exhibits a "stable but cautious" financial pulse. The business shows signs of healthy growth but reveals "symptoms of financial stress" through rising debt and shrinking net equity. Like a patient who has recently undergone a significant intervention (asset purchase funded by debt), the company needs close monitoring and supportive care (cash flow management and profitability focus) to ensure long-term wellness and avoid financial distress.

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