FORSHAWS FENCING LIMITED
Company number 05176006 · Monitor this company
This analysis was written by an AI from the company's public filings. It may contain errors or omissions and is not financial or professional advice.
Financial Health Score: B+ (Good)
The company demonstrates strong, sustained growth in net assets and cash reserves, reflecting a solid underlying business. However, a few areas—such as a large jump in other debtors and rising short-term accruals—require monitoring to ensure they don’t become symptoms of strain.
Key Vital Signs
| Metric | 2025 (17‑month period) | 2024 (12 months) | What It Indicates |
|---|---|---|---|
| Net Assets | £361,395 | £309,006 | Healthy growth; equity cushion has expanded 17% over the period. |
| Cash at Bank | £366,381 | £303,796 | Strong liquidity “pulse” – cash covers 68% of short‑term debts. |
| Net Current Assets (Working Capital) | £246,360 | £150,003 | Improved buffer; the business can comfortably meet near‑term obligations. |
| Current Ratio | 1.45 | 1.30 | Adequate but not robust – a ratio above 1.5 would be more reassuring. |
| Debt to Equity | 1.65 | 1.69 | Moderate leverage; the company is using debt (mainly leases) to fund growth. |
| Retained Earnings Growth | +£52,389 (17 months) | +£124,909 (12 months) | Profitability is evident, but the 17‑month period makes year‑on‑year comparison less direct. |
| Other Debtors | £125,000 | £0 | A sudden large item – requires clarification (e.g., a loan to a director or a deposit). |
Interpretation of Vital Signs
- Cash flow is healthy – the business is generating enough cash to cover day‑to‑day expenses and is not reliant on overdrafts.
- Working capital is positive and improving, meaning the company can pay its suppliers and staff on time.
- Profitability is implied by the steady rise in retained earnings; the company has been consistently in the black for at least the last five years.
- Leverage is manageable, but the increased use of finance leases (from £38,609 total in 2024 to £89,830 in 2025) suggests the company is investing in fixed assets (motor vehicles, plant) to support operations.
Diagnosis
Overall Condition: Fit, with a few precautionary notes.
The company’s financial “vitals” are strong – it has a robust cash position, growing net worth, and positive working capital. The 17‑month period shows continued profitability and investment in tangible assets, which is a sign of confidence and expansion.
Areas to watch (potential “symptoms”):
1. The £125,000 “other debtors” – This is a significant sum with no explanation in the filed accounts. If it is a loan to a director or a related party, it could be a drag on cash flow. If it is a prepayment or deposit, it may be normal, but the lack of detail is a minor red flag.
2. Rising accruals – Accruals increased from £125,120 to £202,887. This could reflect higher accrued expenses (e.g., wages, taxes) or simply timing differences. It should be reviewed to ensure it does not indicate mounting unpaid obligations.
3. Current ratio of 1.45 – While adequate, it is below the traditional 2.0 benchmark. The company relies heavily on cash to cover short‑term debts; if cash were to dip, liquidity could tighten.
4. Lease commitments – The company has taken on additional finance leases, increasing long‑term liabilities. This is fine if the assets generate sufficient returns, but it adds fixed repayment obligations.
Positive indicators:
- No overdue filings – the company is compliant and well‑managed.
- Consistent growth in net assets over the past decade – a track record of resilience.
- Directors have been in place for many years, providing stability.
Recommendations
- Clarify the “other debtors” item – Ensure the £125,000 is recoverable and not a disguised dividend or director’s loan that could weaken the balance sheet. If it is a loan, consider formalising repayment terms.
- Monitor accruals – Review the composition of accruals to confirm they are not masking overdue payables. Keep a close eye on cash flow to ensure the increased accruals do not become a burden.
- Strengthen the current ratio – Aim to keep current assets (especially cash) at least 1.5 times current liabilities. Consider reducing short‑term debt (e.g., by paying down trade creditors faster) or increasing cash reserves.
- Review lease commitments – Ensure that the new vehicles and plant are generating sufficient revenue to cover the lease payments. Avoid over‑leveraging the business with fixed charges.
- Maintain the growth trajectory – The company is clearly profitable and expanding. Continue to reinvest in assets and manage working capital tightly to sustain this momentum.