GNR ELECTRICAL LTD

Executive Summary

GNR Electrical Ltd shows signs of liquidity stress with negative working capital and heavy reliance on director loans, elevating solvency risk despite growth in net assets. The company remains compliant with filings and has stable leadership, but operational cash flow and stock valuation warrant close review to fully assess financial health and sustainability.

GNR ELECTRICAL LTD - Analysis Report

Company Number: 13055893

Analysis Date: 2025-07-20 11:34 UTC

1. Risk Rating: HIGH
   The company exhibits significant liquidity concerns and reliance on director loans to finance operations, indicating elevated solvency risk.

2. Key Concerns:

• Negative Net Current Assets in 2023: The company has net current liabilities of £3,264 as of 31 December 2023, meaning short-term liabilities exceed short-term assets, which can impair its ability to meet immediate obligations.
• Substantial Increase in Directors’ Loan Accounts: Creditors due within one year include £28,423 owed to directors in 2023, up from £6,513 in 2022, showing growing dependence on internal financing rather than operational cash flow.
• Low Cash Balance: Cash at bank is almost negligible (£1 in 2023), signifying limited liquidity for day-to-day operations or unexpected expenses.

3. Positive Indicators:

• Increasing Net Assets: Despite liquidity issues, net assets improved from £1,175 in 2022 to £2,438 in 2023, reflecting some growth in equity possibly from retained earnings.
• No Overdue Filings: Company accounts and confirmation statements are filed on time, indicating compliance with regulatory requirements.
• Stable Leadership: Directors have been consistent since incorporation with no adverse records noted, suggesting stable governance.

4. Due Diligence Notes:

• Investigate the nature and terms of the directors’ loan accounts, including repayment plans and interest arrangements, to assess long-term solvency and related-party risk.
• Review cash flow statements and operational revenue trends to understand the root causes of low liquidity and assess operational sustainability.
• Confirm stock valuation and work-in-progress recognition policies, given the significant £25,000 stock figure appearing in 2023 with no prior year comparison, to evaluate potential overstatement risks.
• Assess the company's client base and contract pipeline to determine future revenue visibility and operational stability.