JDM ELECTRICAL SERVICES LTD

Executive Summary

JDM Electrical Services Ltd is a young company with a fragile financial condition characterized by tight liquidity and negative working capital. While the company is solvent with positive net assets, immediate focus on cash flow management and creditor negotiations is essential to strengthen financial stability. Proactive financial planning and monitoring will be key to navigating the early challenges and supporting sustainable growth.

JDM ELECTRICAL SERVICES LTD - Analysis Report

Company Number: 15162246

Analysis Date: 2025-07-20 18:54 UTC

Financial Health Assessment: JDM ELECTRICAL SERVICES LTD (as of 30 September 2024)

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1. Financial Health Score: C

Explanation:
JDM Electrical Services Ltd is a newly incorporated private limited company (less than 1 year old) operating in electrical installation. The financial data shows some early-stage challenges typical for startups, including negative working capital and minimal cash reserves. However, the company has positive net assets and a modest shareholder equity base, indicating a foundation to build upon. The "C" grade reflects a fragile but not critical financial condition, requiring careful attention to liquidity and cash flow management.

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2. Key Vital Signs

Metric	Value (£)	Interpretation
Current Assets	17,227	Primarily debtors (outstanding invoices), indicating expected cash inflows soon.
Cash at Bank	64	Extremely low cash reserve, a symptom of liquidity stress.
Current Liabilities	25,912	Obligations due within one year exceed current assets, indicating working capital deficit.
Net Current Assets	(8,685)	Negative working capital suggests potential cash flow strain to meet short-term obligations.
Fixed Assets (Tangible)	11,466	Investment in motor vehicle and equipment; assets are tangible but relatively modest.
Total Assets Less Current Liabilities	2,781	Positive but low net assets after current liabilities, showing limited buffer.
Shareholders' Funds	2,781	Equity base mainly from retained earnings and share capital; positive but small.
Trade Debtors	10,000	Significant portion of current assets; timely collection is critical for cash flow health.
Trade Creditors	334	Small amount, suggesting supplier terms may be manageable.
Other Creditors	20,895	Larger component of liabilities, possibly related to tax/social security and other payables.

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3. Diagnosis: Financial "Health" Overview

• Liquidity (Cash Flow Health):
  The company shows signs of tight liquidity — a "symptom of distress" with only £64 in cash against short-term liabilities of nearly £26k. The large debtor balance (£17k) is encouraging but depends on timely collection. The negative net current assets (-£8,685) indicate the company may struggle to meet immediate obligations without additional cash inflows or financing.

• Capital Structure and Solvency:
  Positive shareholders' funds (£2,781) and total net assets after current liabilities suggest the company is solvent but with a narrow margin. This is expected in an early-stage business where initial capital and early profits form the equity base.

• Asset Utilization:
  Tangible fixed assets of £11,466 reflect investment in operational tools (motor vehicle, equipment), essential for an electrical installation business. Depreciation is minimal, indicating recent acquisition.

• Business Operations and Growth Potential:
  The company is in its first full financial year, so these figures are a snapshot of a business in its infancy. The presence of trade debtors shows revenue generation, but the absence of an income statement limits insight into profitability or expense management.

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4. Recommendations: Improving Financial Wellness

• Enhance Cash Flow Management:
  Prioritize speeding up debtor collections to convert trade receivables into cash quickly. Consider offering early payment discounts or stricter credit terms. Monitor cash flow projections closely to avoid liquidity crunch.

• Manage Current Liabilities Prudently:
  Negotiate extended payment terms with creditors where possible to align outflows with cash inflows. Avoid accumulating additional short-term debts without clear repayment plans.

• Build Cash Reserves:
  Even modest positive cash balances can act as a cushion against unexpected expenses. Retain profits where possible to strengthen the cash position.

• Financial Planning and Budgeting:
  Develop a detailed budget and cash flow forecast. Identify periods of potential cash shortfall and plan financing or cost management accordingly.

• Consider External Funding:
  If cash flow issues persist, explore options such as a short-term overdraft facility, invoice financing, or equity injection from shareholders to support working capital needs.

• Regular Financial Monitoring:
  Schedule frequent financial reviews to detect "symptoms" early and respond proactively, tracking key metrics like debtor days, creditor days, and cash balances.

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Medical Analogy Summary

JDM Electrical Services Ltd currently exhibits symptoms of early-stage financial strain, notably in liquidity, akin to a patient with low blood pressure—vulnerable but not critical. The company's net assets provide a "healthy heart" foundation, but the "circulatory system" (cash flow) needs immediate attention to ensure survival and growth. With careful management, these early financial "symptoms" can be treated to restore robust health.

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