Company Number: 13005539

Analysis Date: 2025-07-20 16:39 UTC

Financial Health Assessment: EDEN ELECTRICAL CONTRACTORS LTD

---

1. Financial Health Score: B

Explanation:
The company demonstrates generally good financial health with solid liquidity, positive net assets, and increasing shareholder equity. However, there are some signs warranting attention, such as a decline in cash reserves and high debtor balances relative to cash, indicating potential stress in cash flow management. The score B reflects a company with sound fundamentals but with cautionary symptoms that should be addressed to maintain long-term vitality.

---

2. Key Vital Signs

Metric	2024 Figure	Interpretation
Current Assets	£210,868	Healthy level of assets convertible to cash within a year.
Cash at Bank	£56,090	Cash balance has dropped significantly from £104,014 in 2023, a symptom of tightening liquidity.
Trade Debtors	£54,421	Large debtor book relative to cash; risk of delayed payments impacting working capital.
Current Liabilities	£67,375	Current liabilities have decreased sharply from £149,335 in 2023, indicating improved short-term obligations management.
Net Current Assets	£143,493	Strong working capital position, indicating ability to cover short-term debts comfortably.
Net Assets / Shareholders Funds	£154,820	Positive and increasing, reflecting retained earnings and asset growth — a sign of financial strength.
Profit & Loss Reserves	£144,520	Accumulated profit reserves suggest ongoing profitability since incorporation.
Dividends Paid	£76,000	Shareholders are drawing returns, but this is balanced by profit retention.
Tangible Fixed Assets	£11,327	Modest investment in long-term assets, appropriate for a service-based electrical contractor.
Number of Employees	2	Very small team consistent with micro/small business scale.

---

3. Diagnosis: What the Financial Data Reveals

• Healthy Cash Flow but Signs of Strain:
  The cash balance has nearly halved year-over-year, which raises a "symptom of distress" regarding liquidity management. Although net current assets have improved due to a significant reduction in current liabilities, the cash reserve shrinking could indicate timing issues in cash receipts or increased spending.

• Strong Working Capital and Liquidity:
  The company shows a robust working capital cushion (£143k), meaning it has more than twice the current liabilities in liquid or near-liquid assets. This suggests it can meet short-term obligations without stress, akin to a patient with a strong pulse.

• High Trade Debtor Levels:
  Nearly £54k tied up in trade debtors means a large portion of assets is not immediately liquid. This is a "warning sign" similar to a symptom of sluggish recovery, as delayed customer payments can strain operational cash flow.

• Growing Equity and Capital Base:
  Shareholders’ funds and retained earnings have grown steadily from £34.9k in 2021 to £154.8k in 2024, indicating healthy profitability and reinvestment — a "robust immune response" against financial shocks.

• Director Loans and Dividends:
  Directors have drawn dividends (£76k) and the company owes them £47k, indicating reliance on insider financing. While not necessarily negative, it’s important this does not mask external liquidity issues.

• No Audit Requirement but Transparent Reporting:
  The company benefits from small company exemptions, but has prepared clear financial statements in accordance with FRS 102, suggesting good governance practices.

---

4. Recommendations: Actions to Improve Financial Wellness

• Improve Cash Conversion Cycle:
  Accelerate collection of trade debtors to boost immediate cash availability. Consider stricter credit terms or incentives for early payment to reduce "symptoms" of cash flow tightness.

• Maintain Tight Control on Current Liabilities:
  Continue managing payables efficiently to avoid liquidity crunches. The drop in current liabilities is positive; maintain this discipline.

• Monitor Director Loans and Dividends:
  Ensure director loans are properly documented and repaid in a timely manner. Review dividend policy to balance rewarding shareholders with retaining enough cash for growth and contingencies.

• Plan for Asset Investment:
  Consider strategic investment in fixed assets if it enhances operational capacity or efficiency, but avoid overextension to preserve liquidity.

• Regular Financial Health Check-Ups:
  Conduct periodic reviews of cash flow forecasts and debtor aging reports to catch early warning signs before they develop into serious issues.

---