J & M SHOPFRONT GLAZING LTD

Executive Summary

J & M SHOPFRONT GLAZING LTD is a young, small-scale glazing business with a positive equity base but faces early liquidity challenges evidenced by negative working capital. The company relies significantly on director loans, which underscores a need to diversify funding sources and improve cash flow management. With prudent financial controls and strategic planning, the company can strengthen its financial health and operational stability.

J & M SHOPFRONT GLAZING LTD - Analysis Report

Company Number: 14456804

Analysis Date: 2025-07-29 12:10 UTC

Financial Health Assessment for J & M SHOPFRONT GLAZING LTD

---

1. Financial Health Score: C

Explanation:
The company demonstrates a modest equity base and tangible fixed assets but exhibits early warning signs of liquidity stress, reflected in a negative net working capital position. While not in immediate distress, the financial "vital signs" suggest cautious monitoring is needed to ensure healthy cash flow and operational resilience.

---

2. Key Vital Signs

Metric	Value (£)	Interpretation
Fixed Assets (Tangible)	9,880	Moderate investment in assets (motor vehicles), indicating operational capacity.
Current Assets	19,426	Includes cash (£18,946) and debtors (£480); cash level is relatively healthy.
Current Liabilities	21,462	Short-term obligations slightly exceed current assets, indicating a liquidity gap.
Net Current Assets (Working Capital)	-2,036	Negative working capital signals "symptoms of distress" in short-term liquidity.
Net Assets (Equity)	7,844	Positive shareholder funds indicate some retained profit and financial cushion.
Loans from Directors	17,578	Significant reliance on director loans to finance operations, reflecting external funding dependency.
Employees	2 (average)	Small team size consistent with micro/small enterprise.

---

3. Diagnosis

Liquidity and Cash Flow:
J & M SHOPFRONT GLAZING LTD shows a negative net current asset position (-£2,036), meaning current liabilities slightly exceed current assets. This is a "symptom" of constrained liquidity, which requires careful management to avoid cash flow shortages. However, the company's cash reserve (£18,946) is relatively healthy for a business of this size, providing some buffer.

Capital Structure:
The company relies heavily on director loans (£17,578), which is a common practice in early-stage private companies but points to dependency on insider funding rather than external borrowing or operating cash flow. This can be a point of vulnerability if the director cannot or chooses not to extend further financial support.

Asset Base:
The tangible fixed assets (motor vehicles) of £9,880 provide a modest operational foundation. Depreciation has been charged appropriately, showing prudent accounting.

Profitability and Retained Earnings:
Retained earnings (£7,744) indicate the company has generated some profit since incorporation in November 2022. The positive net assets suggest the company is solvent and has not eroded shareholder value.

Business Scale and Operations:
With only two employees, the company fits within the micro/small business category, which aligns with its filing exemption status and financial scale. This smaller scale can offer agility but also exposes the business to operational risk if key personnel are unavailable.

---

4. Recommendations

• Improve Working Capital Management:
  The negative working capital is a "warning sign" akin to a patient showing early symptoms of fatigue. The company should aim to accelerate debtor collections and/or negotiate longer payment terms with creditors to restore positive working capital.

• Reduce Dependency on Director Loans:
  While director loans have supported initial operations, the company should explore alternative financing such as short-term business loans, invoice financing, or equity injections to diversify funding sources and reduce financial risk.

• Maintain Healthy Cash Flow:
  Regular cash flow forecasting will help ensure liquidity remains "healthy," preventing potential crises. The company should monitor cash inflows and outflows closely, especially given the tight current assets to liabilities ratio.

• Plan for Growth and Profitability:
  Strengthening profitability will build retained reserves, improving net assets and financial stability. This might include exploring higher-margin services or operational efficiencies.

• Prepare for Future Reporting Deadlines:
  The company is current on filing accounts and confirmation statements, which supports regulatory compliance and good governance. Continued timely filings avoid penalties and maintain stakeholder confidence.

---