HARVEY'S HOME IMPROVEMENTS LTD

Executive Summary

Harvey's Home Improvements Ltd exhibits a solid financial condition with strong cash reserves and growing equity, indicating healthy operational performance and investment in assets. However, a notable rise in current liabilities, especially accruals and VAT, suggests emerging short-term financial pressure that requires active management. With prudent monitoring of liabilities and continued focus on cash flow, the company is well-positioned for sustainable growth.

HARVEY'S HOME IMPROVEMENTS LTD - Analysis Report

Company Number: 12774879

Analysis Date: 2025-07-29 16:39 UTC

Financial Health Assessment of HARVEY'S HOME IMPROVEMENTS LTD (as of 31 July 2024)

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1. Financial Health Score: B

Explanation:
The company demonstrates solid financial footing with positive net assets and healthy working capital. There is strong cash liquidity and increasing fixed assets, indicating investment in operational capacity. However, a significant increase in current liabilities and accruals signals a symptom of increased short-term obligations that require monitoring. Overall, the company is financially sound but shows early signs that require cautious management.

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2. Key Vital Signs

Metric	2024 Value	Interpretation
Fixed Assets	£22,254	Increased investment in long-term assets (motor vehicles and equipment), suggesting business growth.
Current Assets	£97,646	Strong short-term asset base, largely driven by cash (£79,922) - a healthy cash reserve.
Debtors	£17,724	Debtors consist entirely of directors’ loan accounts, indicating internal financing or loans to directors.
Current Liabilities	£78,358	Substantial increase from prior year (£11,375), mainly due to accruals and VAT; a potential short-term risk.
Net Current Assets	£19,288	Positive working capital, meaning the company can cover its short-term debts with liquid assets.
Net Assets (Shareholder Funds)	£41,542	Equity has significantly increased from £15,830 in 2023, indicating retained earnings growth and improved net worth.
Share Capital	£100 nominal	Minimal share capital; most funds are retained earnings or director loans.
Employee Count	2	Small team consistent with a micro/small building business.
Liquidity Ratio (Current Assets / Current Liabilities)	~1.25	Above 1, showing the company can meet immediate liabilities but with less cushion than prior year due to rise in liabilities.

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3. Diagnosis: Financial Health Overview

• Healthy Cash Flow and Liquidity: The company holds a substantial cash balance (£79,922), which is a vital sign of healthy operational cash flow and ability to meet obligations. This liquidity is a strong "pulse" indicating financial stability.

• Growth in Fixed Assets: The rise in tangible fixed assets, primarily motor vehicles, suggests active investment in business capacity. This is a positive "growth indicator," showing expansion or upgrading of business resources.

• Increased Current Liabilities – Symptom of Stress: The current liabilities surged significantly to £78,358 from £11,375 last year. This is largely due to VAT and accruals (£54,600). This sudden increase acts like a "symptom of financial strain" and could indicate delayed payments or increased operational costs, which requires close attention.

• Strong Equity Position: The net assets have more than doubled, signaling accumulated profits or capital injections, providing a strong equity buffer, which is the financial equivalent of a robust immune system protecting the company from shocks.

• Directors’ Loan Accounts as Debtors: The presence of £17,724 in directors’ loan accounts under debtors may indicate funds owed by directors to the company, a common practice in small businesses, but it requires proper management to avoid liquidity issues.

• Small Business Scale: With only two employees and a micro/small company classification, the company operates on a tight scale, which can limit risk exposure but also limits economies of scale.

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4. Recommendations: Actions to Improve Financial Wellness

• Monitor and Manage Current Liabilities: The sharp increase in current liabilities, especially accruals and VAT, should be closely monitored to avoid cash flow bottlenecks. Consider negotiating payment terms or improving billing cycles to smooth out cash outflows.

• Maintain Healthy Cash Reserves: Continue to preserve a strong cash buffer to handle any short-term financial stress, ensuring liquidity remains robust.

• Review Directors’ Loans: Ensure directors’ loan accounts are regularly reviewed and repaid or formalised to prevent potential cash flow issues or accounting complications.

• Cost Control and Profit Margins: Analyze operational costs given the increase in accruals; aim to control overhead and improve profit margins to sustain equity growth.

• Plan Asset Utilization: With increased fixed assets, ensure these are efficiently used to generate revenue, avoiding idle capacity that could drain resources.

• Prepare for Growth: Consider strategic planning for scaling operations, including possibly increasing staff or expanding service offerings, to leverage current financial strength.

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