JUST TYRES COMMERCIAL (NW) LTD

Executive Summary

JUST TYRES COMMERCIAL (NW) LTD is currently experiencing significant financial distress, evidenced by negative net assets and working capital deficits, indicating urgent liquidity challenges. However, an improved cash position offers a glimmer of recovery potential. Immediate actions to enhance cash flow, reduce liabilities, and inject capital are recommended to restore financial health and avoid insolvency risks.

JUST TYRES COMMERCIAL (NW) LTD - Analysis Report

Company Number: 12789756

Analysis Date: 2025-07-20 15:30 UTC

Financial Health Assessment Report for JUST TYRES COMMERCIAL (NW) LTD

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1. Financial Health Score: D

Explanation:
The company is currently showing significant financial distress with negative net assets and net current assets, indicating liabilities exceed assets and working capital is insufficient. This grade reflects symptoms of financial strain that require urgent attention to restore balance sheet health.

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2. Key Vital Signs

Metric	Value (2023)	Interpretation
Net Current Assets	-£34,677	Negative working capital, indicating short-term liquidity stress ("poor pulse"). The company owes more in current liabilities than it holds in liquid assets.
Net Assets (Shareholders' Funds)	-£29,150	Negative equity suggests the company’s liabilities exceed total assets, a "weak heart" sign implying insolvency risk if continued.
Cash	£24,323	Cash position improved significantly from previous year (£340), which is a positive "healthy blood flow" sign.
Fixed Assets (Tangible)	£5,527	Modest tangible asset base, depreciating over time, limited cushion to absorb losses.
Current Liabilities	£59,000	High short-term debts compared to cash and current assets, indicating urgent "breathing difficulties" in meeting immediate obligations.
Share Capital	£1 - £10 (discrepancy noted)	Minimal equity capital invested, meaning the company relies heavily on liabilities and retained losses.
Profit and Loss Reserve	-£29,160	Accumulated losses retained in the business, a "chronic illness" symptom showing ongoing unprofitability.
Employees	2 (average)	Small workforce consistent with a micro/small company profile, manageable overheads but limited operational scale.

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3. Diagnosis: What the Financial Data Reveals

The company exhibits clear symptoms of financial distress:

• Negative working capital: The company’s current liabilities substantially exceed current assets, which is a critical "symptom of liquidity crisis." This suggests potential difficulties in meeting short-term debts and operational expenses.

• Negative net assets: The company’s balance sheet is "unhealthy," with total liabilities outweighing assets, indicating that creditors have a stronger claim on assets than shareholders, which is a warning sign for solvency.

• Accumulated losses: The negative profit and loss reserve signals the company has incurred losses historically, eroding shareholder value.

• Improved cash position: The significant increase in cash from £340 to £24,323 is a positive development, implying some recent improvement in cash management or inflows. However, this is not yet sufficient to cover current liabilities.

• Reliance on director’s account: A large amount (£42,625) is owed to the director's account within current liabilities, which may imply director loans or unpaid drawings, suggesting cash flow challenges but also director support.

• Limited asset base: Fixed assets have decreased, reflecting depreciation and limited reinvestment, which may affect operational capacity.

Overall, the company is in a fragile financial state, akin to a patient with chronic illness and acute liquidity symptoms. While not in liquidation or administration, the underlying distress requires monitoring and intervention.

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4. Recommendations to Improve Financial Wellness

• Improve working capital management: Tighten credit control and inventory management to increase current assets and reduce current liabilities. Consider negotiating longer payment terms with creditors ("breathing room") to ease immediate cash flow pressure.

• Cash flow enhancement: Explore ways to boost cash inflow—such as increasing sales, accelerating debtor collections, or securing short-term financing to stabilize liquidity.

• Reduce liabilities: Prioritize repayment or restructuring of short-term debts, especially amounts owed to the director’s account, to strengthen the balance sheet.

• Capital injection: Consider equity infusion from shareholders or external investors to restore positive net assets and provide operational funding.

• Cost control: Review operating expenses and overheads to reduce losses and improve profitability ("medication" to treat chronic losses).

• Financial oversight: Implement robust financial planning and forecasting to detect early "symptoms" of distress and maintain a healthier financial rhythm.

• Professional advice: Engage with insolvency practitioners or financial advisors early if liquidity worsens to avoid forced insolvency procedures.

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Executive Summary