IRVING WEST CAR SALES LTD

Executive Summary

IRVING WEST CAR SALES LTD is financially stable with positive working capital and net assets but shows early signs of liquidity tightening and equity reduction. Maintaining a healthy cash flow and improving profitability will be critical to sustaining financial wellness as the company grows. Proactive cash flow management and operational efficiency will support a positive financial prognosis.

IRVING WEST CAR SALES LTD - Analysis Report

Company Number: 13815505

Analysis Date: 2025-07-29 16:03 UTC

Financial Health Assessment Report for IRVING WEST CAR SALES LTD

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1. Financial Health Score: B-

Explanation:
IRVING WEST CAR SALES LTD demonstrates a moderately stable financial position typical for a micro-entity operating in used car sales. The company maintains positive net current assets and net assets, indicating an underlying ability to meet short-term liabilities and preserve shareholder equity. However, the decline in current assets and net assets from 2022 to 2023 suggests emerging financial strain and potential liquidity tightening. The small scale and limited staff heighten vulnerability to market fluctuations, creating symptoms that warrant cautious monitoring.

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2. Key Vital Signs

Metric	2023 (£)	2022 (£)	Interpretation
Fixed Assets	3,609	2,466	Slight increase in long-term assets; healthy investment in equipment or property.
Current Assets	139,588	194,238	Significant decrease; could indicate cash flow tightening or stock reduction.
Current Liabilities	106,112	151,596	Decrease in short-term debts; positive for liquidity management.
Net Current Assets (Working Capital)	33,817	42,642	Positive but shrinking working capital; watch for cash flow pressures.
Total Assets Less Current Liabilities	37,426	45,108	Declining total assets after short-term obligations; signals cautious stance.
Creditors Due After One Year	9,190	9,730	Long-term liabilities fairly stable; manageable debt load.
Net Assets (Equity)	26,636	33,834	Reduction in shareholder funds; reflects retained earnings erosion or losses.
Staff Numbers	1	1	Minimal headcount; lean operations but risk of over-dependence on key personnel.

Interpretation:
The company shows vital signs of "healthy cash flow" in terms of positive net current assets, but the "symptom of distress" is the noticeable shrinkage in current assets and net equity over the last year. This could imply challenges in maintaining liquidity or profitability. The fixed asset base is small but growing, appropriate for a micro-entity in vehicle sales.

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3. Diagnosis

• Liquidity: The company has positive working capital, a crucial "heartbeat" indicator, meaning it can currently meet its short-term obligations. However, the downward trend in current assets signals potential cash flow tightening if sales or receivables slow.

• Solvency: Positive net assets and shareholder funds show that the company is solvent, with more assets than liabilities. The modest decline in equity might reflect either operational losses or dividend distributions but no alarming depletion of capital.

• Operational Efficiency: With only one employee (likely one of the directors), the company runs a lean operation. This is efficient but leaves little room for capacity expansion or risk mitigation if key personnel are unavailable.

• Growth and Investment: Incremental growth in fixed assets indicates reinvestment, which is positive. However, the drop in current assets could imply reduced inventory or cash reserves, potentially limiting the ability to capitalize on market opportunities.

• Governance & Control: Directors hold equal ownership and control, which can facilitate swift decision-making but may also risk concentration of risk.

Overall Assessment:
IRVING WEST CAR SALES LTD is currently financially healthy for a young micro-entity, with a stable balance sheet and manageable liabilities. The "symptom" to monitor is the reduction in liquidity and equity, which could develop into financial distress if not addressed through improved cash flow management and profitability enhancement.

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4. Recommendations

1. Enhance Cash Flow Monitoring:
   Implement tighter cash flow forecasting and control to ensure liquidity remains robust. Consider strategies to accelerate receivables and manage inventory turnover to avoid cash traps.

2. Profitability Analysis:
   Conduct a detailed review of profit margins on used car sales and associated services. Identify cost-saving opportunities without compromising service quality.

3. Build Cash Reserves:
   Aim to rebuild current assets gradually to provide a buffer against unforeseen expenses or market downturns.

4. Diversify Risk:
   Evaluate opportunities to diversify income streams or customer base to reduce dependence on a narrow market segment.

5. Strengthen Governance:
   Given the small team, ensure clear succession and contingency plans are in place to mitigate risks from key-person dependency.

6. Regular Financial Health Checks:
   Schedule periodic reviews of financial vital signs to detect early symptoms of distress and take corrective actions promptly.

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