JS DISTRIBUTORS LIMITED

Executive Summary

JS Distributors Limited is progressing from an initial loss position into positive net equity, indicating improving financial health. However, negative working capital highlights liquidity challenges that require immediate attention to maintain operational stability. Focused cash flow management and cost controls will be essential to strengthen the company's financial condition moving forward.

JS DISTRIBUTORS LIMITED - Analysis Report

Company Number: 13942842

Analysis Date: 2025-07-20 13:40 UTC

Financial Health Assessment for JS DISTRIBUTORS LIMITED

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1. Financial Health Score: C (Fair)

Explanation:
JS Distributors Limited is a micro-entity in its second full financial year, showing signs of early-stage business development with some fluctuations in working capital and net assets. The company’s net assets have improved from negative (£-770) to positive (£1,561), which is encouraging, but the negative net current assets in the latest year (£-2,939) indicate liquidity stress. Overall, the financial health is fair but requires attention to improve the short-term financial stability.

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2. Key Vital Signs

Metric	2024 (£)	2023 (£)	Interpretation
Fixed Assets	4,500	0	Acquisition of fixed assets signals investment in infrastructure or equipment, positive sign.
Current Assets	5,461	7,126	Decline in liquid and short-term assets, possibly due to cash outflow or reduced receivables.
Current Liabilities	8,400	6,744	Increase in short-term obligations, indicating more immediate debts or payables.
Net Current Assets (Working Capital)	-2,939	382	Shift from positive to negative working capital is a symptom of liquidity stress.
Net Assets (Equity)	1,561	-770	Transition from negative to positive equity is a healthy improvement in overall company value.
Shareholders Funds	1,561	-770	Reflects net assets; positive value indicates owner’s stake is growing.

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3. Diagnosis: What the Financial Data Reveals

• Liquidity Strain: The move from positive to negative net current assets signals a "symptom of distress" in short-term liquidity. The company may struggle to cover immediate liabilities with current assets, which could impact day-to-day operations if not addressed.
• Asset Investment: Introduction of fixed assets (£4,500) indicates some capital investment, which may support future revenue generation, similar to a patient taking steps to strengthen their physical condition.
• Equity Recovery: The shift from negative to positive net assets suggests the company is recovering from earlier losses or initial setup costs, akin to a patient showing signs of recovery after an illness.
• Business Scale & Risk: As a micro-entity with a single director, JS Distributors Limited is in an early growth phase with limited financial buffer. The "vital signs" show vulnerability to external shocks or cash flow disruptions.

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4. Recommendations: Actions to Improve Financial Wellness

• Improve Working Capital Management: Focus on accelerating receivables collection and negotiating longer payment terms with suppliers to ease liquidity pressure. Healthy cash flow is critical to avoid operational disruption.
• Cash Flow Forecasting: Implement robust cash flow forecasting to anticipate shortfalls and manage timing of payments and receipts. This proactive approach can prevent liquidity crises.
• Cost Control Measures: Review operating expenses to identify potential savings or efficiencies, preserving cash reserves.
• Consider Financing Options: If negative working capital persists, explore short-term finance solutions such as a business overdraft or invoice financing to bridge the liquidity gap without jeopardizing operations.
• Monitor Financial Ratios Regularly: Track key ratios such as current ratio and quick ratio monthly to detect early signs of financial distress.
• Maintain Accurate Records: Ensure timely filing of accounts and confirmation statements to avoid penalties and maintain good standing.

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Medical Analogy Summary

JS Distributors Limited exhibits a "healthy recovery" in net worth but shows "symptoms of liquidity distress" due to negative working capital, akin to a patient recovering from illness but still requiring careful monitoring of vital signs. Without timely intervention in cash flow management, the company risks "financial dehydration," which could impair its operational health.

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