JDC FIRE LTD

Executive Summary

JDC FIRE LTD is on a solid financial footing with increasing net assets and positive working capital, reflecting good profitability and operational growth. However, rising trade debtors and liabilities highlight the need for improved cash flow management to maintain liquidity. With focused debtor control and cash reserves enhancement, the company is well positioned for sustainable financial health.

JDC FIRE LTD - Analysis Report

Company Number: 13667905

Analysis Date: 2025-07-20 11:32 UTC

Financial Health Assessment for JDC FIRE LTD

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1. Financial Health Score: B

Explanation:
JDC FIRE LTD displays generally sound financial health with a solid equity base and improving working capital over the last two years. The company is building a healthy reserve of retained earnings, indicating profitability and reinvestment. However, the relatively high creditors, especially tax and social security liabilities, and modest cash reserves signal some liquidity management caution is needed. Overall, the company is financially stable but should focus on maintaining cash flow and managing short-term liabilities.

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2. Key Vital Signs

Metric	2024 Value (£)	Interpretation
Net Current Assets	32,164	Positive working capital, improved from £8,610 in 2023; a healthy sign showing the company can cover short-term obligations.
Cash at Bank	11,461	Steady cash balance; however, cash is low relative to current liabilities, suggesting careful cash flow monitoring is needed.
Debtors (Trade Receivables)	71,168	Significant increase vs prior year (£34,649); implies strong sales or delayed customer payments, potential liquidity risk if collections slow.
Current Liabilities	50,465	Increased from £37,587 in 2023, largely due to higher tax and social security liabilities; may indicate higher profitability but also cash outflows soon due.
Net Assets / Shareholders’ Funds	34,077	Growth from £10,160 in 2023 to £34,077 in 2024 reflects retained profits accumulated — a robust equity buffer.
Tangible Fixed Assets	2,551	Modest fixed asset base; the company is not capital intensive, typical for an electrical installation business.
Director's Loan Account	-3,679	Negative balance (director owes company less than previously), indicates some director funding but reducing liability.

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3. Diagnosis: Financial Condition and Symptoms

• Healthy Cash Flow Signs:
  The company has built up net current assets substantially over the last year, indicating improved liquidity and the ability to meet short-term debts. The increase in net assets and retained earnings demonstrates profitability and sound reinvestment, akin to a patient recovering well from past financial stress.

• Symptoms of Potential Distress:
  The sharp increase in trade debtors may suggest slower customer payments or extended credit terms, which if unchecked could cause cash flow strain — similar to a symptom of dehydration if cash inflows lag behind outflows. The increase in tax and social security liabilities also points to upcoming cash demands that must be managed prudently.

• Stability and Control:
  The company benefits from clear governance with a single controlling director who owns 75-100% of shares and voting rights, providing decisive control but with inherent concentration risk. The lack of overdue filings and compliance with deadlines indicates disciplined management.

• Asset Structure:
  The low level of fixed assets suggests a business model that relies on labour and service delivery rather than capital investment, which typically means more variable cost structure and flexibility.

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4. Recommendations: Steps to Improve Financial Wellness

1. Improve Debtor Management:

   • Implement tighter credit control policies to reduce debtor days. Accelerating collections will bolster cash reserves and mitigate liquidity risk.
   • Consider offering early payment discounts or reviewing customer creditworthiness.

2. Cash Flow Forecasting:

   • Develop rolling cash flow forecasts to anticipate spikes in tax and social security payments, ensuring sufficient cash is reserved to meet these obligations without stress.

3. Strengthen Cash Reserves:

   • Aim to grow cash balances to cover at least 1.5 to 2 times current liabilities, building a stronger liquidity cushion akin to a healthy immune system ready to handle unforeseen shocks.

4. Monitor Director’s Loan Account:

   • Regularly review and formalize the director’s loan account to avoid any confusion in financial reporting and ensure clarity on amounts owed or due.

5. Maintain Profitability Focus:

   • Continue to build retained earnings and monitor cost control, especially given rising liabilities, to sustain equity growth and financial resilience.

6. Consider External Financing Options:

   • If cash flow constraints persist, explore short-term financing such as invoice factoring or a business overdraft facility to smooth working capital cycles.

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