GVE COMMERCIAL SOLUTIONS (BUILDING) LTD

Executive Summary

GVE COMMERCIAL SOLUTIONS (BUILDING) LTD shows moderate financial health with a C rating due to recent liquidity challenges and shrinking equity. The company faces symptoms of cash flow strain with negative working capital and low cash reserves despite stable asset levels. Immediate focus on improving debtor collections and managing short-term liabilities is essential to restore financial wellness and support sustainable growth.

GVE COMMERCIAL SOLUTIONS (BUILDING) LTD - Analysis Report

Company Number: 13789477

Analysis Date: 2025-07-20 17:06 UTC

Financial Health Assessment: GVE COMMERCIAL SOLUTIONS (BUILDING) LTD

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1. Financial Health Score: C

Explanation:
The company demonstrates some strengths such as steady shareholder equity and adequate asset base relative to liabilities, but exhibits signs of liquidity stress and weakening working capital. The slight current liabilities excess over current assets in the latest year signals a "symptom of distress" that requires attention to avoid cash flow crises. Overall, the financial health is moderate but vulnerable without corrective action.

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2. Key Vital Signs

Metric	2024 Value	Interpretation
Current Assets	£121,358	Adequate short-term assets, including debtors and cash, to fund operations.
Cash on Hand	£6,256	Low cash reserves compared to prior year (£43,872), indicating reduced immediate liquidity ("poor pulse").
Debtors	£92,202	Significant receivables, but risk if collection is slow; large accounts receivable can strain cash flow.
Current Liabilities	£121,672	Slightly exceeds current assets, indicating working capital deficit ("weak heartbeat").
Net Current Assets	-£314	Negative working capital, a warning sign of liquidity pressure or short-term funding gap.
Total Assets Less Current Liabilities	£1,199	Net assets reduced significantly from prior year (£4,807), showing erosion of financial buffer.
Shareholders’ Funds	£1,199	Equity base has shrunk, reflecting reduced retained earnings and profitability challenges.
Fixed Assets (Net Book Value)	£1,513	Small tangible asset base, indicating limited long-term investment in plant/equipment.

Note: The company is classified as a Small Private Limited Company engaged in "Other engineering activities" (SIC 71129).

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3. Diagnosis: Financial Condition Overview

• Liquidity and Cash Flow:
  The company is currently exhibiting symptoms of liquidity strain. The decrease in cash from £43,872 to £6,256 within a year is alarming, akin to a patient’s blood pressure dropping suddenly. Negative net current assets (-£314) means the firm has slightly more short-term obligations than liquid resources, risking difficulty in meeting immediate bills without additional financing or faster collection of receivables.

• Working Capital Management:
  Receivables have increased from £69,616 to £92,202, suggesting higher sales or slower payments. The high debtors relative to cash could indicate inefficiencies in cash conversion cycle, which can choke the "blood flow" of cash needed for daily operations. Current liabilities also increased, mainly in taxation and social security which doubled from £31,133 to £66,866 — this could indicate a tax payment timing issue or increased payroll liabilities.

• Profitability and Equity:
  The reduction in shareholders’ funds from £4,807 to £1,199 indicates retained losses or distributions exceeding profits. Without the income statement (not filed due to small company exemptions), exact profitability is unclear, but the erosion of equity signals the company is "sick" in terms of generating net profits.

• Asset Base:
  The company holds modest tangible fixed assets (£1,513 net), primarily computer equipment. This reflects a light capital structure, typical for service or consultancy engineering firms, which is not necessarily negative but means growth depends heavily on cash flow and receivables management.

• Governance and Control:
  Three directors each control roughly 25-50% share and voting rights, indicating balanced ownership but also potential for cohesive decision-making. No red flags such as director disqualifications or insolvency proceedings were noted.

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4. Recommendations: Prescriptions for Financial Wellness

1. Improve Cash Flow Management:

   • Accelerate debtor collections by tightening credit terms and improving invoicing processes.
   • Consider offering early payment discounts or stricter credit checks to reduce receivable days.

2. Manage Short-Term Liabilities:

   • Negotiate with creditors for extended payment terms to ease liquidity pressure.
   • Review and plan for tax and social security payments carefully to avoid spikes in liabilities.

3. Build Cash Reserves:

   • Prioritize building a cash buffer to ensure ability to meet unexpected expenses and smooth operations.
   • Explore short-term financing options if necessary, but cautiously to avoid over-leveraging.

4. Profitability Review:

   • Analyze cost structure and pricing to improve margins and restore retained earnings.
   • Monitor project profitability closely given the engineering activities nature to avoid loss-making contracts.

5. Regular Financial Monitoring:

   • Implement monthly financial reporting focusing on cash flow forecasts and working capital metrics to catch symptoms early.
   • Engage financial advisory support if needed to diagnose deeper operational inefficiencies.

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