LEGACY ELECTRICAL LTD

Executive Summary

Legacy Electrical Ltd demonstrates solid financial health with increasing working capital and equity, indicating a stable and growing business foundation. While operations are currently lean, the company’s liquidity and compliance are strong, positioning it well for future growth. Strategic expansion and vigilant financial management are recommended to maintain and enhance this positive outlook.

LEGACY ELECTRICAL LTD - Analysis Report

Company Number: 13888559

Analysis Date: 2025-07-20 18:58 UTC

Financial Health Assessment: LEGACY ELECTRICAL LTD

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1. Financial Health Score: B

Explanation:
Legacy Electrical Ltd shows promising signs of a financially healthy micro-entity in its second full year of operations. The company’s net current assets and shareholders’ funds have increased significantly year-on-year, indicating improving working capital and equity base. However, given the company’s small scale, limited employee base, and modest asset base, the score is not an A but a solid B reflecting healthy growth but with room for improvement in operational scale and financial robustness.

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2. Key Vital Signs

Metric	2024 (£)	2023 (£)	Interpretation
Current Assets	17,797	5,161	Healthy increase in liquid and short-term assets, indicating improved cash or receivables.
Current Liabilities	9,435	4,108	Increase in short-term obligations; manageable given asset growth.
Net Current Assets (Working Capital)	8,362	1,053	Positive and growing working capital, a vital sign of liquidity and operational stability.
Shareholders’ Funds (Equity)	8,362	1,053	Growth in net worth, reflecting retained earnings or capital injection.
Average Number of Employees	1	2	Small workforce; may limit operational capacity but reduces fixed costs.

Interpretation:

• The company’s working capital has expanded nearly eightfold, a very good sign of liquidity — akin to a patient whose blood pressure has stabilized after initial concerns.
• The increase in current liabilities is noted but is offset by a larger rise in current assets, indicating the company manages its short-term debts well.
• The equity growth signals healthy capital retention or investment, supporting the business’s foundation.
• The reduction in employee numbers suggests lean operations but could also indicate capacity constraints or cost control focus.

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3. Diagnosis: Financial Condition and Symptoms

• Liquidity and Cash Flow: The company’s positive and increasing net current assets suggest a healthy cash flow position with enough short-term assets to cover liabilities, reducing risk of solvency issues. This is a strong foundational sign, especially for a micro company.
• Growth Trajectory: The substantial increase in shareholders’ funds and current assets from 2023 to 2024 reflects healthy growth—like a patient gaining strength after initial treatment.
• Operational Scale: The small number of employees may indicate limited operational capacity or a highly specialised business model. This can be both a strength (low overheads) and a weakness (limits scale and revenue potential).
• Financial Reporting and Compliance: The company is up-to-date with filings and not overdue, indicating good compliance hygiene—a positive governance symptom.
• Ownership and Control: Two major shareholders with significant control (25-50% each) and active director involvement suggest clear governance lines but potential concentration risk.
• No Signs of Financial Distress: No indications of overdue filings, negative net assets, or liquidity crunches. No director disqualifications or legal issues reported.

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4. Recommendations: Improving Financial Wellness

1. Enhance Operational Capacity: Consider strategic hiring or subcontracting to increase workforce capacity, enabling growth in revenue and service delivery.
2. Monitor and Manage Current Liabilities: While current liabilities have grown, ensure payment terms and credit management remain tight to avoid cash flow bottlenecks.
3. Build Financial Buffers: Retain earnings or seek additional capital injections to further strengthen equity and prepare for future expansion or unexpected expenses.
4. Diversify Revenue Streams: Explore additional services or markets within electrical installation to reduce dependency on limited income sources—like broadening a patient’s diet for better resilience.
5. Maintain Compliance Vigilance: Continue timely filings and robust record-keeping to avoid administrative penalties or disruptions.
6. Regular Financial Reviews: Conduct periodic detailed financial analyses and cash flow forecasting to catch early symptoms of distress or opportunity.

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Summary

Legacy Electrical Ltd exhibits strong and improving liquidity, growing equity, and sound compliance practices. The company’s financial “vital signs” suggest a stable and growing business with manageable risks and healthy short-term financial health, akin to a patient showing steady recovery and strength. Attention to operational scalability and careful management of liabilities will be key to sustaining this positive trajectory.