ERRIOC CARPENTRY LIMITED

Executive Summary

Errioc Carpentry Limited is currently facing liquidity challenges and a declining equity base, indicating financial distress despite ongoing operations. Immediate focus on cash flow management, cost control, and capital restructuring is crucial to restore financial stability and ensure sustainable growth. With proactive management, the company can recover from its fragile position and build a healthier financial future.

ERRIOC CARPENTRY LIMITED - Analysis Report

Company Number: 13267423

Analysis Date: 2025-07-29 14:56 UTC

Financial Health Assessment: Errioc Carpentry Limited

---

1. Financial Health Score: D

Explanation:
Based on the available financial data for the year ending 31 March 2025, Errioc Carpentry Limited shows signs of financial stress, particularly regarding liquidity and solvency. While the company has positive net assets, the heavy creditor balances falling due after one year and negative net current assets indicate cash flow constraints and potential difficulty meeting short-term obligations. The decline in shareholders' funds from prior years further suggests a weakening financial position. Therefore, a grade D reflects a company with concerning financial symptoms needing prompt attention.

---

2. Key Vital Signs

Metric	2025 (£)	2024 (£)	Interpretation
Fixed Assets	36,963	9,331	Increase in long-term investment, possibly equipment or property, signaling capital expenditure.
Current Assets	809	11,966	Sharp decline in liquid assets and receivables; dangerously low cash and near-cash resources.
Current Liabilities	10,592	12,844	Slight decrease but still substantial short-term debts to pay.
Net Current Assets (Working Capital)	-9,579	-787	Negative working capital worsened significantly; a symptom of liquidity distress.
Creditors Due After One Year	25,511	0	New long-term debt or deferred liabilities introduced; increases financial leverage.
Net Assets (Shareholders' Funds)	973	7,694	Substantial erosion of equity; company barely above zero net worth.
Average Employees	2	2	Stable headcount indicates no immediate workforce reduction.
Share Capital	100	100	Minimal equity injection; likely founder funding only.

Interpretation of Vital Signs:

• The negative net current assets (working capital) indicate the company may struggle to cover short-term liabilities with current assets, a sign of "cash flow anemia."
• The sharp increase in fixed assets, financed largely by creditors (current and non-current), suggests the company has invested heavily but with increased financial risk.
• The introduction of £25,511 creditors due after more than one year represents long-term debt or obligations, increasing financial leverage and risk.
• The fall in shareholders’ funds from £7,694 to £973 signals accumulated losses or withdrawals reducing the company’s financial buffer.
• Overall, the company shows "symptoms of distress" in liquidity and solvency, though it remains operational with no overdue filings.

---

3. Diagnosis

Errioc Carpentry Limited is exhibiting clear signs of financial strain. The main "symptom" is a deteriorating liquidity position: current assets are insufficient to meet current liabilities, resulting in negative working capital worsening sharply over the latest year. This "cash flow anemia" could threaten day-to-day operations if not managed carefully.

The company's increased fixed asset base, financed through increased long-term and short-term liabilities, has not yet translated into stronger equity or liquidity. This suggests the investment has yet to yield returns or has strained resources.

The dwindling shareholders' funds indicate accumulated losses or capital erosion, reducing the cushion available to absorb future shocks. While the company is still "alive" and active, these symptoms combined suggest it is in a fragile financial state akin to a patient with compromised immune function—vulnerable to external shocks.

---

4. Recommendations

To improve financial wellness and stabilize the company’s financial health, the following actions are advised:

• Improve Liquidity Management:
  Prioritize converting current assets to cash more efficiently—tighten credit control to accelerate receivables and review inventory turnover if applicable. Seek to reduce current liabilities by negotiating longer payment terms or settlements.

• Review Capital Structure:
  Consider equity injection or owner loans to reduce reliance on creditor financing and improve the net asset position. This would strengthen the balance sheet and investor confidence.

• Cost Control and Profitability Focus:
  Analyze the profitability of projects and overhead costs to enhance margins and retain earnings. Since the company has only two employees, ensure labour and operational efficiencies are maximized.

• Asset Utilization:
  Ensure the increased fixed assets are generating adequate returns. If possible, consider disposing of underutilized assets to improve cash flow.

• Financial Forecasting and Monitoring:
  Implement regular cash flow forecasting and financial health monitoring to identify distress signals early and take corrective actions promptly.

• Seek Professional Advice:
  Engage with financial advisors or accountants to explore restructuring options or financing alternatives to navigate the current financial strain.

---