ES COMPUTER AIDED DRAWING AND DESIGN SERVICES LTD

Executive Summary

ES COMPUTER AIDED DRAWING AND DESIGN SERVICES LTD currently faces liquidity challenges, highlighted by negative working capital and minimal cash reserves, indicating early financial distress symptoms. While its overall solvency is intact, these warning signs require immediate action to improve cash flow and manage liabilities. Prompt operational and financial adjustments can restore stability and support sustainable growth.

ES COMPUTER AIDED DRAWING AND DESIGN SERVICES LTD - Analysis Report

Company Number: 13191071

Analysis Date: 2025-07-20 18:07 UTC

Financial Health Assessment of ES COMPUTER AIDED DRAWING AND DESIGN SERVICES LTD

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1. Financial Health Score: C

Explanation:
The company shows some signs of financial stress, primarily due to its negative working capital and low net asset base. While it remains solvent with positive net assets, the deterioration in liquidity and increase in liabilities relative to current assets indicate symptoms of financial strain. The modest equity base and thin cash reserves warrant caution but do not yet suggest critical distress.

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2. Key Vital Signs

Metric	2024 Value	Interpretation
Current Assets	£5,985	Slightly improved but still low
Cash on Hand	£18	Critically low cash reserves (“weak pulse”)
Debtors	£5,967	Large proportion of assets tied up in debtors
Current Liabilities	£7,719	Increased significantly, causing liquidity pressure
Net Current Assets (Working Capital)	-£1,734	Negative working capital (“sign of distress”)
Net Assets (Equity)	£109	Very thin equity buffer (“fragile backbone”)
Share Capital	£100	Minimal capital invested by shareholders
Profit & Loss Reserve	£9	Minimal retained earnings indicating low profitability

Trend Observations:

• Working capital swung from positive £125k in 2023 to negative £1,734 in 2024, a warning sign for liquidity.
• Current liabilities have nearly tripled from £2,892 to £7,719, indicating growing short-term obligations.
• Cash reserves have dropped sharply from £206 to £18, a critical symptom of cash flow weakness.
• Debtor balances have increased but cash conversion seems delayed or impaired.

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3. Diagnosis

The financial "vitals" of ES COMPUTER AIDED DRAWING AND DESIGN SERVICES LTD show early signs of liquidity stress and operational tightness. The company's cash flow appears to be "weak," as evidenced by minimal cash on hand despite increased debtors, suggesting difficulties in converting sales into cash rapidly enough to cover liabilities.

The rise in current liabilities alongside negative working capital suggests the company may be relying on credit or deferring payments, which can be a temporary relief but creates risk if prolonged. Equity remains positive but minimal, showing a fragile cushion against shocks.

The company's business activity in engineering design and education-related services typically involves project-based revenue, where timely billing and collection are critical. The negative net current assets indicate a potential "cash flow blockage" that could impair the company’s ability to meet short-term obligations without external support.

Overall, these financial "symptoms" suggest the company is in a vulnerable state but not yet in critical failure. The thin equity and negative working capital are early warning signs that require proactive management.

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4. Recommendations

Immediate Actions:

• Improve Cash Flow Management: Accelerate debtor collections, possibly by tightening credit terms or offering early payment incentives to convert receivables to cash faster.
• Control Costs and Liabilities: Review and negotiate payment terms with suppliers and creditors to align outflows more closely with cash inflows. Avoid incurring additional short-term liabilities without secured cash flow.
• Increase Cash Reserves: Consider a capital injection or short-term financing to create a buffer against liquidity shortages. This could be through shareholder loans or external finance.

Medium-Term Measures:

• Enhance Profitability: Review pricing, contract management, and overhead costs to improve margins and build retained earnings.
• Financial Monitoring: Implement regular cash flow forecasting and liquidity monitoring to detect and manage distress symptoms early.
• Business Development: Diversify client base and services to stabilize revenue streams and reduce reliance on large debtors.

By addressing these areas with urgency, the company can stabilize its financial health, restore a "healthy cash flow pulse," and build a stronger equity foundation.

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