Company Number: 13667310

Analysis Date: 2025-07-20 11:54 UTC

Financial Health Assessment for J T ELECTRICAL INSTALLATION SERVICES LIMITED

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1. Financial Health Score: C

Explanation:
The company shows a stable but cautious financial position typical for a relatively new business. While there are some signs of financial strain in working capital, the net asset growth and positive equity base indicate fundamental viability. However, the negative net current assets ("working capital deficit") and rising short-term liabilities are symptoms that require active management to improve liquidity and cash flow health.

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2. Key Vital Signs: Critical Metrics and Interpretation

Metric	2023 Value (£)	2022 Value (£)	Interpretation
Fixed Assets	13,150	6,674	Increased investment in tangible assets (plant, machinery, vehicles), reflecting business growth efforts.
Current Assets	13,659	6,050	Nearly doubled, mainly due to increased cash and debtors, indicating more business activity.
Cash	9,802	6,049	Healthy cash position, increased by ~62%, a positive sign of liquidity.
Debtors	3,857	1	Significant increase in receivables; potential risk if collections are delayed.
Current Liabilities	22,383	8,765	Substantial rise, mainly driven by bank loans and corporation tax, creating pressure on liquidity.
Net Current Assets	-8,724	-2,715	Negative working capital worsened, indicating short-term liquidity stress (symptom of distress).
Net Assets (Equity)	4,426	3,959	Positive and growing shareholders' funds, showing retained earnings and capital injections.
Share Capital	1	1	Minimal, typical for a small private company.

Additional Notes:

• The company is a Private Limited Company operating in electrical installation (SIC 43210).
• The firm has been active since 2021, with two employees including the director.
• The director holds 75-100% control, indicating centralized decision-making.

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3. Diagnosis: Financial Condition and Underlying Business Health

The company resembles a patient showing early signs of financial strain primarily due to a rising burden of current liabilities surpassing current assets, causing negative working capital. This condition is akin to "shortness of breath" in financial terms, where the business may struggle to meet short-term obligations promptly.

However, the "heart" of the business—the equity and net assets—is still strong and growing, suggesting that the business has been profitable enough to retain earnings and invest in fixed assets, which is a good sign of sustainable growth.

The increase in fixed assets and cash balance indicates investment and potentially improved operational capacity, but the sharp increase in bank loans and tax liabilities points to possible reliance on external financing and upcoming payment obligations that must be managed carefully.

The rising debtors balance implies higher sales or services rendered on credit, which can be positive if collections are efficient, but a risk if customers delay payments.

Overall, the business is functioning but with "symptoms of liquidity stress" that could escalate if not addressed. The financial health is moderate, with potential for improvement if working capital management is tightened.

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4. Recommendations: Specific Actions to Improve Financial Wellness

• Improve Working Capital Management:
  Prioritize reducing current liabilities or increasing current assets to reverse negative net current assets. This could involve negotiating longer payment terms with suppliers or accelerating receivables collection.

• Monitor and Manage Cash Flow:
  Maintain and grow the healthy cash reserves to ensure operational flexibility. Prepare cash flow forecasts regularly to anticipate and manage peaks in liabilities.

• Review Financing Structure:
  Evaluate the terms and necessity of bank loans. Consider restructuring debt to longer terms or alternative financing methods to ease immediate pressure on liquidity.

• Strengthen Credit Control:
  Implement or enhance credit risk assessment and debtor management to reduce overdue receivables, improving cash inflow reliability.

• Plan for Tax Liabilities:
  Set aside or plan for corporation tax payments carefully to avoid surprises impacting working capital.

• Maintain Asset Efficiency:
  Review the utilization of fixed assets to ensure investments are generating expected returns and not tying up unnecessary capital.

• Regular Financial Health Monitoring:
  Adopt routine financial health check-ups, including ratio analysis and cash flow reviews, to detect early warning signs and respond proactively.

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