Company Number: NI670325

Analysis Date: 2025-07-20 11:02 UTC

Financial Health Assessment for LISSIZE ELECTRICAL LTD

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1. Financial Health Score: B

Explanation:
LISSIZE ELECTRICAL LTD shows a generally sound financial position with steady asset growth and positive net assets over the last five years. However, the sharp increase in current liabilities in the latest financial year, combined with a significant drop in net current assets, signals emerging liquidity concerns that should be monitored closely. The business is financially stable but exhibiting early symptoms of potential cash flow stress.

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2. Key Vital Signs

Metric	2024 (£)	2023 (£)	Interpretation
Fixed Assets	53,155	13,373	Significant investment in long-term assets, indicating capital expenditure to support growth.
Current Assets	58,151	72,582	Decrease in liquid assets, potentially less cash or receivables available for short-term needs.
Current Liabilities	51,425	10,714	Sharp increase in short-term obligations, a warning sign of rising immediate financial demands.
Net Current Assets	6,726	61,868	Large drop indicates reduced working capital, impacting day-to-day operational liquidity.
Total Net Assets	59,881	75,241	Net assets remain positive but have declined, suggesting some erosion of shareholder value.
Average Number of Employees	5	5	Stable workforce size reflecting consistent operational capacity.
Share Capital	110	110	Minimal equity capital; company relies on retained earnings and liabilities for funding.

Interpretation of Vital Signs:
The company has invested heavily in fixed assets recently, which is a positive sign of capacity building but may have tied up cash resources. The doubling of current liabilities within one year is a significant symptom of financial stress, indicating that the company may be facing challenges meeting short-term obligations. This liquidity strain is reflected in the net current assets plunging from a very healthy £61,868 to a tight £6,726, signaling a narrowing margin of safety in operational cash flow.

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3. Diagnosis

LISSIZE ELECTRICAL LTD is in a generally stable financial condition with positive net assets and steady employee levels, indicating ongoing business operations and some growth investment. However, the latest accounts reveal symptoms of liquidity distress: a sharp rise in current liabilities combined with a fall in current assets and net current assets. This "tightening pulse" in working capital could impair the company’s ability to pay creditors promptly and fund day-to-day expenses, risking operational disruptions if not managed effectively.

The significant increase in fixed assets suggests the company is expanding or upgrading its operational base, which could generate future revenue but has temporarily stressed cash flows. The company’s micro-entity status with simplified reporting means less detailed financial disclosure, so continuous monitoring of cash flow and liabilities is essential to ensure these symptoms do not develop into a more serious condition.

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4. Recommendations

• Improve Liquidity Management: Prioritize actions to reduce current liabilities or increase short-term assets, such as negotiating extended payment terms with suppliers or accelerating receivables collection. Maintaining a healthy working capital "heartbeat" is critical.
• Cash Flow Forecasting: Implement rigorous monthly cash flow forecasts to anticipate liquidity crunches early, enabling proactive financial decisions.
• Asset Utilization Review: Assess the returns on recent fixed asset investments to ensure they translate into increased revenue or efficiency; avoid further heavy capital expenditure until liquidity improves.
• Cost Control: Review operating expenses and overheads for potential savings to ease cash flow pressure.
• Access to Credit: Explore short-term financing options such as overdrafts or invoice financing to provide a buffer and smooth liquidity fluctuations.
• Regular Financial Monitoring: Given the symptoms of distress, frequent financial health checks are advised to detect any worsening conditions promptly.

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