ENVIROTEC SOLUTIONS LIMITED

Executive Summary

Envirotec Solutions Limited shows a sound financial foundation with positive working capital and healthy cash reserves, indicating good short-term liquidity and financial stability. However, as a young company, it should focus on managing rising liabilities and expanding operational capacity to sustain growth and prevent future cash flow challenges. Implementing rigorous financial controls and detailed profitability analysis will strengthen its financial wellness.

ENVIROTEC SOLUTIONS LIMITED - Analysis Report

Company Number: 14114758

Analysis Date: 2025-07-29 18:58 UTC

Financial Health Assessment of Envirotec Solutions Limited

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1. Financial Health Score: B-

Explanation:
Envirotec Solutions Limited demonstrates a generally positive financial position with sufficient net current assets and shareholders' funds growth over the past two years. However, the company is still in its early stages (incorporated in 2022), with relatively modest asset size and working capital. The absence of employees and limited turnover data, combined with increasing current liabilities, suggest some caution. This grade reflects a "fairly healthy" financial condition with room for strengthening operational and liquidity metrics.

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2. Key Vital Signs

Metric	2024 Value (£)	Interpretation
Current Assets	22,494	Adequate short-term resources, mainly cash-based.
Cash	16,968	Healthy cash reserves indicating liquidity strength.
Debtors	5,526	Moderate receivables; timely collection vital.
Current Liabilities	13,870	Short-term obligations have risen, warrant monitoring.
Net Current Assets	8,624	Positive working capital, a "healthy pulse" showing ability to meet short-term debts.
Shareholders' Funds	8,624	Equity has grown significantly from £100 in 2023 to £8,624, indicating retained earnings and capital infusion.
Employees	NIL	No staff employed, suggesting reliance on directors or contractors.

Interpretation of Vital Signs:

• The company maintains a positive working capital position, which is a key "vital sign" indicating that it can cover its short-term debts without distress.
• The strong cash position ("healthy cash flow") supports operational flexibility.
• Increasing current liabilities, especially "Other creditors" (£10,192), and taxation/social security (£3,648) indicate growing obligations that must be managed carefully to avoid liquidity strain.
• The jump in debtors from £100 to £5,526 suggests increased sales or services rendered but also introduces the risk of delayed payments impacting cash flow.

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3. Diagnosis

Current Financial Condition:
Envirotec Solutions Limited is in the early growth phase with clear signs of developing business activity, as seen by increased debtors and cash balances. The balance sheet shows no signs of financial distress—no overdrafts or negative net current assets. The company's equity base has improved substantially, reflecting retained profits or capital injections.

Symptoms of Potential Concern:

• The company has no employees, which might limit operational capacity or scalability and could indicate reliance on directors or subcontractors.
• Rising current liabilities, especially "other creditors," require close management to prevent cash flow bottlenecks.
• Absence of detailed Profit & Loss data limits insight into profitability and operational efficiency, which are critical for a full health check.

Overall Diagnosis:
Envirotec Solutions Limited appears financially stable with a "healthy heart" of cash and positive working capital. However, the company should be mindful of managing its liabilities and ensuring that debtor collections remain efficient. The lack of employees and limited data on turnover or profitability suggests the business is still establishing its operational base.

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4. Recommendations

1. Enhance Cash Flow Monitoring:
   Regularly track debtor collections and creditor payments to avoid liquidity crunches. Set up clear credit control procedures to convert receivables into cash swiftly.

2. Manage Current Liabilities Prudently:
   Develop a payment schedule to manage tax and other creditors to avoid penalties or interest charges. Negotiate payment terms with suppliers where possible to ease short-term cash demands.

3. Consider Operational Capacity:
   Evaluate if hiring key employees or subcontractors is necessary to support growth and improve service delivery. This can also help diversify operational risk away from directors.

4. Prepare Comprehensive P&L Reports:
   Although exempt from audit, detailed profit and loss accounts will provide insight into profitability and operational efficiency. This is crucial for strategic planning and attracting investment or credit.

5. Build Financial Resilience:
   As the business grows, consider building reserves or securing credit facilities to buffer against unexpected expenses or downturns.

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