ELECTRA RAIL GRAPHICS LIMITED

Executive Summary

Electra Rail Graphics Limited is a newly formed company displaying early financial strain, primarily due to negative working capital and reliance on director loans. Immediate focus should be placed on improving cash flow, securing external funding, and managing costs to stabilize the financial position. With these steps, the company can transition from financial distress towards sustainable growth.

ELECTRA RAIL GRAPHICS LIMITED - Analysis Report

Company Number: 14849710

Analysis Date: 2025-07-29 20:08 UTC

Financial Health Assessment Report: ELECTRA RAIL GRAPHICS LIMITED

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1. Financial Health Score: Grade D

Explanation:
The company is in its first full financial year of operation, and the financial data reveals early-stage distress signs. Negative net current assets and net liabilities indicate liquidity challenges, while the reliance on director loans points to funding gaps. The business is not yet generating positive equity or working capital, which are critical for stability.

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2. Key Vital Signs

Metric	Value (£)	Interpretation
Fixed Assets	7,500	Investment in plant & machinery showing some capital expenditure; asset base is modest.
Current Assets	3,377	Low short-term assets, mostly debtors (£3,000) and minimal cash (£377), indicating limited liquidity.
Current Liabilities	20,172	High short-term obligations, primarily director loans, creating a liquidity crunch.
Net Current Assets	-16,795	Negative working capital ("symptom of cash flow strain"), company owes more than it owns short-term.
Net Assets (Equity)	-9,295	Company is in a net liability position, meaning liabilities exceed assets — a worrying sign.
Shareholders’ Funds	-9,395	Negative equity indicating accumulated losses or funding structure issues.
Loans from Directors	20,172	Company depends heavily on director funding to cover operational needs.
Employees	0	No employees yet, typical of a startup phase, but limits operational capacity.

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3. Diagnosis: What the Financial Data Reveals

• Cash Flow Distress: The company shows clear symptoms of cash flow strain, with current liabilities exceeding current assets by nearly £17,000. This “negative working capital” means the business may struggle to meet short-term obligations without external support.

• Dependence on Director Loans: The entire current liabilities figure is represented by loans from directors (£20,172). This indicates the company is relying on internal funding rather than external finance or operational cash flow. While common in startups, it poses risks if this support is withdrawn.

• Negative Equity Position: Net liabilities of £9,295 and negative shareholders’ funds reflect that the company has accrued losses or that investments have not yet converted to positive net assets. This is not unusual for a company in its first year but warrants close monitoring.

• Asset Base and Investment: The company has invested £10,000 in plant and machinery, with net book value after depreciation of £7,500. This fixed asset base supports operational capacity but also requires maintenance of cash flow to avoid asset distress.

• Early Stage Business: Zero employees and modest trade debtors (£3,000) signal the company is still very much in startup mode, possibly building its customer base and operational systems.

• Risk of Liquidity Crunch: Without an inflow of cash or external finance, the company faces a risk of being unable to meet its liabilities as they fall due — a key symptom of financial distress.

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4. Recommendations: Actions to Improve Financial Wellness

• Improve Cash Flow: Prioritize accelerating debtor collections and managing any payable terms to reduce pressure on cash. Consider negotiating extended payment terms with suppliers or directors.

• Seek External Funding: Explore options for bank overdrafts, loans, or investment to reduce dependence on director loans and diversify funding sources. This will improve liquidity and operational resilience.

• Cost Control and Revenue Growth: Focus on securing new customers or contracts to generate revenue. Manage expenses tightly to avoid further erosion of equity.

• Financial Monitoring: Implement regular cash flow forecasting and financial reviews to detect early symptoms of distress and take corrective action promptly.

• Director Loan Management: Formalize director loans with clear terms and repayment plans to mitigate governance risks and clarify financial obligations.

• Prepare for Growth: Once cash flow stabilizes, consider hiring key personnel to support business operations and growth initiatives.

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Medical Analogy Summary:
ELECTRA RAIL GRAPHICS LIMITED currently exhibits signs akin to a patient in early-stage financial strain: "negative working capital" as a symptom of cash flow distress, and "negative equity" indicating underlying financial weakness. The company is in recovery mode, relying on "director loans" as a form of life support. Without intervention to improve liquidity and revenue generation, there is a risk of financial "organ failure" (insolvency). However, with careful management and external support, the prognosis can improve as the business matures.

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