JOHN H LITHGO & SON LTD

Executive Summary

JOHN H LITHGO & SON LTD exhibits a sound financial foundation typical of a young micro-entity, with positive net assets and a narrowly positive working capital indicating cautious but stable financial health. The company should focus on strengthening liquidity and managing cash flow carefully to ensure sustainable growth and avoid financial distress. Continued prudent management and incremental investment will support healthy development in this early stage.

JOHN H LITHGO & SON LTD - Analysis Report

Company Number: 14685511

Analysis Date: 2025-07-29 14:55 UTC

Financial Health Assessment for JOHN H LITHGO & SON LTD

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1. Financial Health Score: B

Explanation:
Given the company’s early stage of development and micro-entity status, the financial metrics indicate a relatively stable but nascent financial position. The positive net current assets and shareholders’ funds demonstrate foundational financial health, but tight working capital and modest asset base suggest caution. The score reflects a "good" but not yet robust financial condition typical of a startup phase.

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2. Key Vital Signs

Metric	Value (£)	Interpretation
Fixed Assets	24,046	Indicates investment in long-term equipment or property, a positive sign of capital formation.
Current Assets	108,553	Healthy level of liquid or near-liquid assets to cover short-term needs.
Current Liabilities	105,664	High short-term obligations relative to current assets, leaving a narrow margin.
Net Current Assets (Working Capital)	2,889	Small positive working capital; the company can cover short-term debts but with limited buffer.
Total Assets Less Current Liabilities	26,935	Net asset value reflecting overall solvency at this early stage.
Shareholders Funds	26,935	Equity base showing owner investment and retained earnings (or losses).
Average Number of Employees	2	Small workforce, consistent with micro company status.
Operating Lease Commitments	6,412	Ongoing fixed financial commitments that require cash flow planning.

Interpretation of Vital Signs:
The company shows "healthy cash flow" signs with current assets slightly exceeding current liabilities, which is akin to a patient whose vital signs are stable but with a narrow margin for stress. The fixed assets investment indicates the company is building operational capacity, a positive development. However, the low net current assets warn of "symptoms of financial strain" under adverse conditions such as delayed receivables or unexpected expenses.

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3. Diagnosis

JOHN H LITHGO & SON LTD is in the early stages of business growth, having been incorporated in February 2023. The financial statements to April 2024 show the company moving from a nominal financial base (£100 net assets in 2023) to a more substantial footing (£26,935 net assets in 2024), signifying initial capital investment and operational setup.

The company’s balance sheet reflects a startup with a "healthy but delicate circulation" of funds — current assets slightly outpace current liabilities, but the closeness of these figures suggests the company must carefully manage its cash flow to avoid liquidity stress.

The small number of employees (2) and micro-company status indicate limited operational scale, which reduces overhead risk but also means limited internal resources to manage financial or operational shocks.

No indications of overdue filings or legal distress are present, and the director’s background as an Electrical Engineer aligns well with the company’s SIC classification in manufacturing electrical equipment for motor vehicles, suggesting relevant expertise is guiding the business.

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4. Recommendations

• Strengthen Working Capital: Aim to increase net current assets by improving cash reserves or reducing short-term liabilities, possibly through negotiating better payment terms with suppliers or accelerating receivables.
• Monitor Cash Flow Diligently: Establish robust cash flow forecasting to anticipate and manage the narrow working capital buffer, avoiding liquidity crises.
• Plan for Growth Investments: As the company grows, consider increasing fixed asset investment prudently to support production capacity without overextending financial resources.
• Maintain Compliance and Reporting Discipline: Continue timely filing of accounts and confirmation statements to avoid penalties and maintain business reputation.
• Explore Funding Options: If expansion is planned, evaluate external funding (e.g., loans, equity investment) to support asset acquisition and working capital without straining cash flow.
• Operational Efficiency: With a small team, prioritize operational efficiency and possibly outsource non-core administrative functions to optimize resource use.

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