JGM GARDENS LIMITED
Executive Summary
JGM Gardens Limited is experiencing significant liquidity and equity erosion, signaling financial stress with negative working capital and declining asset base. Immediate focus on cash flow management and cost reduction is essential to stabilize the business and prevent insolvency. With swift corrective actions, there is potential to restore financial health and operational stability.
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This analysis is opinion only and should not be interpreted as financial advice.
JGM GARDENS LIMITED - Analysis Report
Financial Health Assessment for JGM Gardens Limited
1. Financial Health Score: D
Explanation:
JGM Gardens Limited shows significant signs of financial distress in its latest financial year ending 28-Feb-2025. The company's liquidity position has deteriorated sharply, with net current liabilities increasing to £18,515. Net assets have declined dramatically from £39,673 to £4,027, indicating a severe erosion of equity. This grade reflects a company struggling with working capital management and declining asset base, which requires urgent remedial action.
2. Key Vital Signs
Metric | 2025 Value | Interpretation |
---|---|---|
Fixed Assets | £24,323 | Decreased by nearly 50% from previous year; potential asset disposals or impairments |
Current Assets | £21,795 | Declined significantly, reducing cash or receivables available for immediate use |
Current Liabilities | £40,310 | Slightly decreased but still high relative to current assets, indicating liquidity pressure |
Net Current Assets (Working Capital) | -£18,515 | Negative working capital signals poor short-term financial health and risk of cash flow problems |
Total Assets Less Current Liabilities | £5,808 | Reduced sharply from £43,035, reflecting overall asset base shrinkage and increased liabilities |
Net Assets (Equity) | £4,027 | Declined significantly, indicating value erosion and potential solvency concerns |
Shareholders Funds | £4,027 | Mirrors net assets, showing shareholders’ residual claim is low and weakening |
Additional Context:
- Micro-entity status: As a micro company, JGM Gardens benefits from simplified reporting but also has limited scale.
- Single director and employee: The company relies heavily on one person, which can be a risk factor operationally.
- Industry (SIC 81300 - Landscape services): Typically capital-light but reliant on steady contracts and cash flow to meet obligations.
3. Diagnosis: Symptoms Analysis
Symptom: Shrinking Fixed Assets & Current Assets
The nearly 50% drop in fixed assets and substantial reduction in current assets suggest the company may have sold equipment or is facing declining business activity, reducing its asset base and liquidity cushion.Symptom: Negative Working Capital
A negative net current asset position (-£18,515) is a clear symptom of cash flow distress, where short-term liabilities exceed available liquid assets. This can cause payment difficulties to suppliers and creditors.Symptom: Significant Equity Decline
The drop in net assets from £39,673 to £4,027 indicates that accumulated losses or asset write-downs have eroded shareholder value, a sign of ailing financial health or operational losses.Symptom: Potential Over-reliance on Director
With one director who is also the sole employee, operational and financial risks are concentrated. Any disruption to this individual’s involvement could exacerbate company vulnerability.Name Changes
The company changed names twice in a short period, which may be a sign of restructuring or rebranding attempts possibly in response to financial or strategic challenges.
4. Prognosis: Future Financial Outlook
Given the current trajectory, JGM Gardens Limited faces a challenging financial outlook. Without intervention, the negative working capital and declining equity raise the risk of insolvency or the need for external financing. The company’s ability to meet short-term obligations is compromised, which may impair supplier relationships and operational continuity.
However, as a micro company with a single director-owner, there is potential for nimble decision-making to restructure operations, reduce costs, and improve cash flow quickly if corrective actions are taken without delay.
5. Recommendations: Prescriptions for Financial Wellness
Improve Cash Flow Management:
- Conduct a detailed cash flow forecast to identify timing mismatches and avoid liquidity crises.
- Accelerate debtor collections and negotiate extended payment terms with creditors to ease current liability pressures.
Cost Control and Asset Utilisation:
- Review operating expenses for possible reductions without compromising service quality.
- Evaluate fixed assets for disposals of non-essential items to generate cash or reduce maintenance costs.
Explore Financing Options:
- Consider short-term credit lines or overdrafts to manage working capital gaps.
- Investigate government grants or support schemes for SMEs in the landscaping sector.
Strategic Business Review:
- Assess customer base and contract profitability to focus on more lucrative or stable revenue sources.
- Consider partnerships or subcontracting to reduce overheads and increase operational flexibility.
Governance & Risk Management:
- Document contingency plans for director absence or operational disruptions given the sole director structure.
- Maintain timely filing of accounts and returns to avoid penalties and preserve company reputation.
Medical Analogy Summary:
JGM Gardens Limited currently exhibits "symptoms of financial distress" such as "negative working capital" and "shrinking equity," akin to a patient with a weakened immune system and dehydration. Immediate "treatment" focusing on cash flow stabilization and cost control is essential to avoid "financial organ failure" (insolvency). With prompt intervention, the company has a chance to regain "financial vitality."
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