JW CONTRACTING LTD

Executive Summary

JW CONTRACTING LTD is currently experiencing financial strain characterized by sharply reduced liquidity and equity, risking operational stability. Immediate focus on cash flow improvement, cost control, and strategic revenue enhancement is crucial to reversing this downward trend and restoring financial health.

JW CONTRACTING LTD - Analysis Report

Company Number: 13951912

Analysis Date: 2025-07-20 11:14 UTC

Financial Health Assessment for JW CONTRACTING LTD

---

1. Financial Health Score: D

Explanation:
JW CONTRACTING LTD shows signs of financial distress in the latest financial year ending 31 March 2024. The company’s net assets and working capital have sharply declined compared to the previous year, indicating weakening liquidity and capital structure. The significant drop in cash and debtors alongside persistent liabilities suggests challenges in maintaining healthy cash flow and operational stability. This scores the company at a D grade, reflecting concerns that require immediate attention to avoid further deterioration.

---

2. Key Vital Signs:

Metric	31-Mar-2024	31-Mar-2023	Interpretation
Current Assets	£4,177	£15,065	Sharp decline reduces liquidity buffer.
Cash at Bank	£928	£6,931	"Healthy cash flow" is impaired. Potential cash crunch.
Debtors	£3,249	£8,134	Reduced receivables may indicate lower sales or collections issues.
Current Liabilities	£3,603	£5,050	Slight decrease but still significant short-term obligations.
Net Current Assets (Working Capital)	£574	£10,015	Drastic drop, close to minimal positive working capital.
Creditors Due After One Year	£6,308	£8,060	Long-term liabilities remain material.
Net Assets / Shareholders’ Funds	£531	£10,308	Diminished equity base; risk of insolvency rising.
Fixed Assets Value (Tangible)	£7,734	£10,312	Some asset depreciation or disposal, asset base reduced.
Number of Employees	1	1	Small headcount; micro/small company scale.

---

3. Diagnosis:

JW CONTRACTING LTD is exhibiting symptoms of financial strain. The drastic reduction in net current assets from £10,015 to £574 signals a loss of liquidity "vital signs" — the company’s ability to cover short-term debts with short-term assets is weakened. The "healthy cash flow" symptom has deteriorated, with cash reserves falling from nearly £7k to under £1k, which is critical for daily operations and meeting immediate liabilities.

The company’s net assets have plummeted from £10,308 to just £531, indicating erosion of shareholder equity and increasing financial vulnerability. While liabilities, both short-term and long-term, remain significant relative to assets, the company still manages a very modest positive working capital, which is a fragile state.

The reduction in debtors may suggest either a decline in sales activity or improved collection efforts, but combined with the cash drop, it likely reflects reduced business inflows. Tangible assets have depreciated, reflecting usage or impairment, which is normal but adds to the pressure on asset backing.

Given that JW CONTRACTING LTD is a one-person company operating in other engineering activities (SIC 71129), the business may be in an early growth phase or facing operational challenges impacting its financial stability.

---

4. Recommendations:

1. Improve Cash Flow Management:

   • Prioritize accelerating debtor collections to improve liquidity.
   • Review payment terms with suppliers to extend payables without harming relationships.
   • Explore short-term financing options if necessary to support working capital.

2. Cost Control and Operational Efficiency:

   • Scrutinize overheads and variable costs to identify savings opportunities.
   • Consider whether fixed asset usage can be optimized or if any disposals are advisable.

3. Review Business Strategy and Revenue Streams:

   • Evaluate the causes behind the decline in receivables and cash—whether sales have dropped or collection issues exist.
   • Explore diversification or new contracts to stabilize and grow revenue.

4. Strengthen Financial Monitoring:

   • Implement regular financial reviews to detect early warning signs ("symptoms") of distress.
   • Consider professional advice on restructuring if financial stress continues.

5. Equity and Funding:

   • Assess possibilities of new equity injections or shareholder loans to bolster net assets.
   • Maintain compliance with filing deadlines to avoid penalties that could worsen cash flow issues.

---